Lifetime ISAs guide

veryintrigued

jake838 wrote: »

hi all,

first post here so bear with me, ive been doing some research on moving money from my Help to buy isa to lifetime isa. on the website martin has come up with a plan of.....

Rule no. 4 – Unsure when you’ll buy? Max out a Help to Buy ISA and put £1 in a LISA. Again, there’s a schedule to follow to max this out…
– Open a top Help to Buy ISA now and save to the max in it.
– On 6 April 2017 open a LISA with only £1. That way the clock has started on the ‘you must have held it a year’ rule.
– If you’ve more savings to put away, use normal top savings accounts.
– In March 2018 (before the tax year ends) if you’re not close to buying, transfer the Help to Buy ISA into the LISA. And also take any money out of normal savings to put in the LISA up to £1,600 (the LISA limit minus £2,400 – a year’s maximum Help to Buy contributions). This way you’ll have maxed out your contributions for when you buy (if you aren’t convinced you’ll definitely buy at some point, stick with a Help to Buy ISA, it’s safer).

My question is i thought you wernt allowed to pay into more than one ISA per tax year? so how can i open a LISA with £1 and continue to pay into my HTB ISA in the same tax year?

Thanks in advance for the help.

Duplicate post of

http://forums.moneysavingexpert.com/showpost.php?p=71832394&postcount=1

Ed-1

jake838 wrote: »

hi all,

first post here so bear with me, ive been doing some research on moving money from my Help to buy isa to lifetime isa. on the website martin has come up with a plan of.....

Rule no. 4 – Unsure when you’ll buy? Max out a Help to Buy ISA and put £1 in a LISA. Again, there’s a schedule to follow to max this out…
– Open a top Help to Buy ISA now and save to the max in it.
– On 6 April 2017 open a LISA with only £1. That way the clock has started on the ‘you must have held it a year’ rule.
– If you’ve more savings to put away, use normal top savings accounts.
– In March 2018 (before the tax year ends) if you’re not close to buying, transfer the Help to Buy ISA into the LISA. And also take any money out of normal savings to put in the LISA up to £1,600 (the LISA limit minus £2,400 – a year’s maximum Help to Buy contributions). This way you’ll have maxed out your contributions for when you buy (if you aren’t convinced you’ll definitely buy at some point, stick with a Help to Buy ISA, it’s safer).

My question is i thought you wernt allowed to pay into more than one ISA per tax year? so how can i open a LISA with £1 and continue to pay into my HTB ISA in the same tax year?

Thanks in advance for the help.

You can only pay into one type of ISA in one tax year. LISA is not a cash ISA. H2B ISA is a cash ISA. They're different types of ISA so you can pay into both.

jake838

Ed-1 wrote: »

The H2B ISA isn't a separate product - it's a cash ISA so you can only pay into one cash ISA per year. The lifetime ISA however is a separate product so you can pay into that and a cash ISA in the same year.

if thats the case what type of ISA is the LISA?

Ed-1

jake838 wrote: »

if thats the case what type of ISA is the LISA?

A new type - a LISA.

veryintrigued

Ed-1 wrote: »

The H2B ISA isn't a separate product - it's a cash ISA so you can only pay into one cash ISA per year. The lifetime ISA however is a separate product so you can pay into that and a cash ISA in the same year.

Maybe worth adding you still have to work within the 20k ISA total allowance between ISA products?

darren72

I turn 40 at the end of this year (December) but believe I can open and continue to contribute to a LISA until I turn 50 ?

Is money saved into a LISA in the form of a cash/bank account rather than an investment ? - or can it be 'invested' to increase the returns ?

Thanks

Sebrof89

Hi all,

Apologies if this had been asked before. Do we know who will be offering the LISA yet? Just curious as I am interested in switching my HTB ISA into a LISA to take advantage of the higher yearly allowance and the bonus being able to be used for the deposit.

Another thing I've been wondering is, if I do switch the cash I currently have in my HTB to a LISA, will I get a 25% bonus on my HTB money plus the £4K first years allowance?

Thanks in advance.

bowlhead99

darren72 wrote: »

I turn 40 at the end of this year (December) but believe I can open and continue to contribute to a LISA until I turn 50 ?

Yes, as long as you haven't turned 40 when LISAs become available in April, you'll be allowed to open one at some point before your 40th, and once you're in you're in, so can keep contributing until 50. Basic scheme design outline here (might not be the very very latest version, as some things change with the consultation and implementation process): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508176/Lifetime_ISA_final.pdf

Is money saved into a LISA in the form of a cash/bank account rather than an investment ? - or can it be 'invested' to increase the returns ?

Per the government rules, the product can be used for either, a bit like how now people can invest in S&S ISAs to invest for long term or cash ISAs to store cash. It remains to be seen which providers have what to offer inside their LISAs, because it hasn't launched yet

For example cash would be a pretty terrible way to store your wealth from now until age 60 because inflation would eat away at it, so you would want to use one that allows investments if your plan was not to use most of the money until you were able to draw it out and keep the government bonus at that age.

However, investments would be a risky way to save up your money if the reason you were using a LISA was to save for your first-time-buyer house in three or four years time, as you don't want a market crash to take a third of your investment away from you just as you were hoping to buy the house.

So basically both options will be available. You might find that the service provider with the best cash option won't be the same as the service provider with the best investment options.

P1Fanatic

I turn 40 this April 15th so will need to move quickly if the earliest launch is April 6th. Is any lender actively advertising LISAs yet as I can't find anyone?

I already get max pension contribution from my employer so a LISA
seems a no brainer for addiotional savings towards retirement. Other than the lost bonus & exit fee for early withdrawals are there any obvious pitfalls?

Thanks
Simon

King_Of_Fools

P1Fanatic wrote: »

I already get max pension contribution from my employer

Do you mean your employer contributes £40,000 into your pension each year?