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Help to Buy ISA guide

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  • My apologies if a similar question has been answered previously. I have looked through this thread but just want to be certain.

    For background: I am a 47 year old higher rate tax payer. I opened a new Easy Access Cash ISA with the Coventry Building Society this year in May 2019 paying 1.49%. I transferred into this nearly £30k from my previous Cash ISA. I have not payed any new money into this Cash ISA.


    I am interested in opening a Help To Buy (HTB) ISA before the 30th November 2019 deadline and am thinking of going with Nationwide or NatWest as they have decent HTB rates and the greatest flexibly, with the option of being able to open a “split ISA”.

    My question: I want to check that the following money transfer plan is OK under the current ISA rules: Open the HTB ISA. Transfer the initial monthly deposit of £1,200 out of my Cash ISA into a non ISA account and then transfer this into the HTB ISA. Follow this with monthly deposits of £200 in the HTB ISA from either my non ISA savings or from further transfers of my Cash ISA (via a non ISA account). Pay NO new money into my Cash ISA while I am paying into the HTB ISA. Next year transfer my Cash ISA to another decent rate Cash ISA.

    I would welcome your thoughts on this plan.
  • masonic
    masonic Posts: 27,172 Forumite
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    I see no issues with the above plan. If you aren't going to use your full £20k ISA allowance then withdrawing from your previous tax year cash ISA to fund your HTB ISA is the easiest option.
  • Hi All,


    I wonder if anyone can please offer some advice.



    I've already paid in 20k into my stocks and shares ISA this year. I just heared about the help to buy ISA (thanks Martin) and I really want to open one before it goes.


    Do I have any options here? Open one but don't pay anyting until next year, transfer from the S&S ISA ?



    Applogies for the newbieness :wink:
  • eskbanker
    eskbanker Posts: 36,993 Forumite
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    groupThink wrote: »
    I've already paid in 20k into my stocks and shares ISA this year. I just heared about the help to buy ISA (thanks Martin) and I really want to open one before it goes.


    Do I have any options here? Open one but don't pay anyting until next year, transfer from the S&S ISA ?
    One of the main ISA rules is that current tax year contributions need to be kept together in one account, so your £20K needs to be in one place and only a tiny fraction of that could go into a new HTB anyway, so that's not a flier. Neither is opening one and not funding it in the same tax year....

    If you've previously paid into ISAs then you could potentially transfer some prior year money into a new HTB ISA to fund it, if both providers are OK with partial transfers?

    Alternatively, you might find that the Lifetime ISA is a suitable proposition for next April, as it offers the same 25% bonus, on a larger annual amount, and isn't being withdrawn anytime soon. You have to hold one for 12 months before being able to access the money without penalties but if you're chucking money at a long-term S&S ISA then you're presumably not in a hurry to buy your first property?
  • kamkop
    kamkop Posts: 30 Forumite
    Fifth Anniversary 10 Posts
    Good afternoon,

    Looking for an advice regarding HTB ISA. My partner opened HTB in 2017. Apparently during the process of setting it up there was miscommunication. My partner has a property abroad (not bought, not living in) which was mentioned during discussion but bank assistant said it should not be a problem and open HTB ISA account. Now I am confused as the more I read, the more I think it is illegal to hold this account... What would be next steps to fix it? Many thanks in advance for your help!
  • eskbanker
    eskbanker Posts: 36,993 Forumite
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    kamkop wrote: »
    My partner has a property abroad (not bought, not living in) which was mentioned during discussion but bank assistant said it should not be a problem and open HTB ISA account. Now I am confused as the more I read, the more I think it is illegal to hold this account... What would be next steps to fix it?
    The definition of first-time buyers for HTB ISA purposes is listed at https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf, which does make it very clear that property ownership outside the UK is treated the same as within the UK and therefore if he owns one abroad he's not entitled to open a HTB ISA.

    Next step: close it....
  • kamkop
    kamkop Posts: 30 Forumite
    Fifth Anniversary 10 Posts
    Yes, makes sense. Thank you. How about interest gained this way? Just does not sound right to get it, although, the total amount might be small.
  • eskbanker
    eskbanker Posts: 36,993 Forumite
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    kamkop wrote: »
    How about interest gained this way? Just does not sound right to get it, although, the total amount might be small.
    While there is an argument that your partner was acting in good faith in relying on information provided by a bank employee, if he's feeling conscientious he could declare to the bank that the account was opened in error when ineligible and leave it to them to correct it in accordance with their guidance from HMRC.

    My expectation would be that he'd be allowed to retain the interest but that it would be treated as taxable, which would only result in tax actually being charged if he earns enough interest in total from savings to exceed his personal savings allowance.
  • Rich2808
    Rich2808 Posts: 1,385 Forumite
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    eskbanker wrote: »
    While there is an argument that your partner was acting in good faith in relying on information provided by a bank employee, if he's feeling conscientious he could declare to the bank that the account was opened in error when ineligible and leave it to them to correct it in accordance with their guidance from HMRC.

    My expectation would be that he'd be allowed to retain the interest but that it would be treated as taxable, which would only result in tax actually being charged if he earns enough interest in total from savings to exceed his personal savings allowance.

    Or just close it and take the interest - and not make a fuss about it. Its a mere technical breach based on incorrect advice from the bank when you opened it - and no real harm done over a few quid in interest (which is probably well below the £1,000 tax free allowance anyway) when the total ISA payment per annum would have been well below the maximum £20k allowed. Had the bonus of up to £3k been incorrectly claimed from HMRC it would be quite another matter!
  • eskbanker
    eskbanker Posts: 36,993 Forumite
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    Rich2808 wrote: »
    Or just close it and take the interest - and not make a fuss about it. Its a mere technical breach based on incorrect advice from the bank when you opened it - and no real harm done over a few quid in interest (which is probably well below the £1,000 tax free allowance anyway) when the total ISA payment per annum would have been well below the maximum £20k allowed. Had the bonus of up to £3k been incorrectly claimed from HMRC it would be quite another matter!
    Yes, wouldn't disagree with that - as above I was initially recommending OP's partner simply close the account, and only highlighted the more correct route in response to OP's concern that it didn't seem appropriate to claim a small gain. The bank did indeed give inaccurate guidance but OP's partner would still have had to declare eligibility at the point of opening, so there is scope for debate, albeit over an amount so trivial as to render it futile!
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