Lifetime ISAs guide

Killing_Position

Because Nutmeg have decided not to allow help to buy ISA transfers, I recently transferred my Nutmeg lifetime ISA into a Skipton lifetime ISA. I also took the opportunity to transfer my help to buy ISA into my new Skipton lifetime ISA. I'd like some advice with regards to how much more money I can put into the lifetime ISA between now and April.

£4500 was in my help to buy ISA by April 2017
£5950 was the final balance in my help to buy ISA, the extra £1450 being composed of £1400 of contributions and £50 of interest paid after April
£101 was transferred from Nutmeg to Skipton, of which £100 was contributions and £1 was interest

What is the maximum I can pay in to my lifetime ISA between now and the end of the tax year?
a) £2500
b) £2450
c) Some other amount

Thanks

eskbanker

The answer is c.

You need to break down the £50 HTB interest into what was earned before this tax year, even if it was paid in this tax year - your HTB provider should be able to give this figure (and should already have provided it to Skipton as I understand it, to allow them to advise you of your remaining allowance).

Once you have that, your qualifying LISA contributions this tax year will be £1400 plus the interest earned since 6 April 2017 (a subset of the £50) plus the £100 paid into Nutmeg.

If that's too much faff, err on the side of caution and treat the £50 as all being earned in 2017/18, leaving £2450 remaining allowance....

tommysaver

I seriously need to pull my finger out with this. I'm sub <25 but may aswell max out the LISA -

Am I right in thinking the Skipton one is just solid guaranteed money (Likely will do this option)

But these others that offer the 'stocks and share' type LISA are more of a gamble i.i not guaranteed? (Calculated risk)

Many thanks!

Rosiek1992

Hi Everyone! New to the forum but getting very confused with all the ISA talk!
Me and my partner are yet to open an ISA and looking to buy in the next 2 years but not sure which account is best to open. We don’t have a H2B ISA or LISA- we don’t think we’ll be able to get a property for under £250K where we live so the H2B won’t help us.
Is it best to open both accounts each or shall we both just open a LISA?
Sorry if this has been discussed I’ve tried to search through to find the answers!!

Many thanks,
R

eskbanker

Rosiek1992 wrote: »

Me and my partner are yet to open an ISA and looking to buy in the next 2 years but not sure which account is best to open. We don’t have a H2B ISA or LISA- we don’t think we’ll be able to get a property for under £250K where we live so the H2B won’t help us.
Is it best to open both accounts each or shall we both just open a LISA?

Best thing is to open a LISA each.

In case you haven't already read it, you can't get the 25% bonus on a LISA and a HTB for a first-time purchase, so you effectively have to choose, and, since the LISA has the higher annual contribution and a higher property value cap, it's the obvious one to go for, as long as you won't be buying for a least a year.

The interest rate on a cash LISA is poorer than a HTB though, so if you're saving more than £4K/year then using a HTB as an overflow purely for its interest rate is a possibility, although regular savers may also help here.

Rosiek1992

Thanks for your advise ‘Eskbanker’

Regards
R

Alexland

I have been pondering what to do with our S&S LISAs in year 3 when the balances will be around £15k each.

From a platform fees perspective this is the point where moving from fund percentage fees to AJ Bell and HL capped fees for shares, ETFs and investment trusts of £30 or £45 respectively starts becoming attractive.

I would probably do HL (never thought I would say that as I have always concluded they are too expensive - ColdIron might think I have gone soft) as I have other investments involving AJ Bell (Halifax SIPP) where I am already well over the FSCS limit. Also I know such a transfer would please Dunstonh who is always red flagging Nutmeg's losses.

The only problem is that I don't buy shares anymore (too much concentrated risk / stamp duty), trusts have high >0.4% fees (and stamp duty again) and with ETFs then I cannot find one that offers a good enough diversification mix (most of the global ones seem 50% US heavy due to market cap). Unless I have overlooked one? That's why I usually stick to mixed asset OEIC and Unit Trust funds in my other accounts.

Given the low value of LISAs it would probably cost too much in £10 AJB or £12 HL trade fees to hold more than one ETF holding. Unless I alternated each year but that's unlikely to be a good basis for asset allocation.

The devil in me says put it all in an Emerging Market ETF to counterbalance how these countries are under represented in my other accounts but it would be a rollercoaster.

Is anyone else thinking ahead to year 3+ and if so what's your strategy?

Alex

funguy

I have been looking at a s+s LISA too with HL, AJ Bell or Nutmeg.
I notice AJ Bell take their fees out the LISA itself whereas HL will take the fee out of your separate cash account. Unclear how Nutmeg take their fee. This will obviously make a difference to the tax free amount sitting in the LISA right?

Im still unsure which provider to go with. Are there addtional risks with the safety of the money in Nutmeg as they are such a smaller company?

Thanks

Alexland

Nutmeg deduct the fees automatically from the investment returns. We have been with them since April on the 4/5 fixed allocation risk (80% equities) and it's been surprisingly stable accumulation to £4150ish including fee deductions. Given their ongoing losses and increasingly hopeless business case I would only trust them up to the £50k FSCS limit and if they fail getting your money back could take ages like when an airline goes bust. Even if they are still around the percentage fees will just keep rising as the investment grows. I really like their service and investment approach (better robo than Moneyfarm) but have reluctantly concluded they are not our long term provider.

AJ Bell would be most likely cheapest in the long term for most scenarios and I was reasonably happy with their YouInvest SIPP before I moved it to Halifax SD for fixed fees on funds. As the Halifax SD SIPP is underpinned by AJ Bell then that rules them out for our LISAs. But they could be good for you?

I estimate that if the government continued to allow us to contribute to our LISAs to the age of 50 mine would be worth around £100k and my wife's around £150k at 60 assuming 2% above inflation growth. If they were with the same provider that would put us £150k over our 2x£50k FSCS limit (assuming it eventually gets increased for inflation) which is OK relative to our anticipated future wealth as we would have no other investments with HL and they are very financially secure. We would be similarly over the limit with Halifax SD / AJ Bell, Interactive Investor, Fidelity and Aviva too by then.

So given those values in LISA year 3+ it would lead me to favour a capped (essentially fixed price) LISA from HL if only I could find a single ETF (or maybe investment trust) that I was happy with which is my real problem.

Ps. HL taking fees outside the LISA could be quite useful between the ages of 50 and 60 as if you cannot contribute more you would have to keep manually selling holdings incurring a trade cost with AJ Bell to pay fees.

Alex

Ryry02

Hi everyone,

Newbie here, looking to open a Skipton LISA very soon as at the minute my savings are just sitting in my bank ( I know) !

Anyway my question is: Is the £4000 you can get a bonus on per calendar year (ie actual 12 months) or is it the financial year? So if I put money in tomorrow do I get the bonus yearly in November or in April? (I know it has to be a year before I can use the bonus) Basically I know HTB ISA is per month and I want to know if with the LISA I can put in £4000 now then £4000 in May 2018 for example, or do I have to wait until November 2018 to put in the second £4000?

Thank you in advance!!