Lifetime ISAs guide

kozor

Fantastic- thanks!

Meely

Can someone give me some advice. My partner and I were looking to open a LISA I initially did some research before they were launched and then it got put on the back burner. Now I want to invest before it is too late but I'm sailing close to the wind, his birthday is on 7th February and he will be 40. My instinct is that we would be better off with a share scheme. Can he only contribute until he is 50 though? Any advise on what to go for we want something fairly low risk and easy. Thank you

Woodaaay

Hi All, can anyone confirm whether transferring the H2B portion of a Nationwide Split ISA can be transferred into Skipton without issue? Does the cash ISA account just stay where it is with Nationwide?

eskbanker

Meely wrote: »

Can someone give me some advice. My partner and I were looking to open a LISA I initially did some research before they were launched and then it got put on the back burner. Now I want to invest before it is too late but I'm sailing close to the wind, his birthday is on 7th February and he will be 40. My instinct is that we would be better off with a share scheme. Can he only contribute until he is 50 though? Any advise on what to go for we want something fairly low risk and easy. Thank you

First things first, the I in LISA is for Individual so you can't have a joint one if that's what you were thinking of, i.e. if one person is 40 it doesn't stop the other from opening one (if they're under 40 of course!).

Anyway, worth reading through https://www.moneysavingexpert.com/savings/lifetime-ISAs#pension2 to weigh up whether it makes more sense to use a pension or a LISA (or both of course) for retirement planning. As you say, it isn't possible to add to a LISA past 50 but it can't then be withdrawn until 60, which is less flexible than a pension.

In the context of planning investments for the long term, it really makes no sense to aim for 'low risk' as an objective, which in any case means different things to different people. 20+ years gives you the luxury of being able to afford plenty of fluctuations in the value of your investments and you can always reduce a risk profile in the later years as withdrawal/drawdown gets closer.

Your partner still has a couple of weeks to research the world of investing but in any case it makes sense to take the time pressure off by opening a S&S LISA now with a token amount just to do so while still 39, and then plan investing strategy in more detail at leisure....

hbell86

Does the interest made in your H2B ISA in the 2017/18 tax year count towards your LISA allowance when you transfer it across to a LISA? Or is it just your physical contributions made this tax year that count towards your LISA allowance.

JayBeeFrog

I just completed the transfer from my Santander Help to Buy ISA in to my Skipton LISA, which included around £45 interest from this tax year.

Looking at the available ISA allowance shown on my Skipton account page, it suggests that the interest has not affected my allowance for this year. Only the money I added in to my HTB ISA (£200 each month x 9 months) plus the £1 I already had in the LISA has affected the allowance. In other words I have an allowance of £18,199 remaining.

Kim_13

hbell86 wrote: »

Does the interest made in your H2B ISA in the 2017/18 tax year count towards your LISA allowance when you transfer it across to a LISA? Or is it just your physical contributions made this tax year that count towards your LISA allowance.

Taken from: https://www.moneysavingexpert.com/savings/lifetime-ISAs

"You can transfer a Help to Buy ISA into a LISA, but should you?

This is an area many are finding very confusing so let's try to break it down a little...

Transfer a Help to Buy ISA into a LISA by 5 April 2018 and you get the bonus on ALL of it. If you transfer your Help to Buy ISA into a LISA, you'll get the bonus on that, as well as your LISA savings. The bonus will be added a few weeks after the end of the 2017/18 tax year (so around the start of May 2018). Money transferred in after that doesn't get the extra bonus.

Note: if you go for the Skipton cash LISA, you'll need to have transferred in your Help to Buy ISA by 1 March 2018; transfers after this won't be accepted. If you're going for one of the stocks and shares LISAs, these don't have a time limit, but it's best to do it in good time. Check before opening that your chosen LISA accepts transfers in.
Transfer, and any Help To Buy ISA contributions made before 6 April 2017 don't eat up your LISA allowance. If you transfer in your Help to Buy ISA before 5 April 2018, all the money you had put in it before 5 April 2017 won't impact your £4,000 annual LISA allowance. However, any money put in after does – eg, if you put £1,000 in your Help to Buy ISA after 6 April 2017 then later that tax year transferred it into a LISA, you will only be able to add £3,000 more to your LISA. Read how this works in practice.
Many of you have emailed us with situations like the following, asking what counts towards what allowance, and what gets the bonus. Hopefully, this helps to explain...

Helen Homebuyer opened her Help to Buy ISA in December 2015 and saved the max £1,200 in the first month, and £200/mth since. In April 2017, she had £4,500 in her Help to Buy ISA (including interest). She'd kept saving in the Help to Buy ISA since, waiting for the first cash LISA to launch, meaning she had £5,150 in her Help to Buy ISA by June 2017 - again, including interest.

Helen then transferred her Help to Buy ISA into a cash LISA once the first one came onto the market. She'd paid £600 in to it in the 2017/18 tax year, and been paid £50 in interest, so that counts towards her LISA allowance, meaning she had £3,350 of allowance left. She put this amount into her cash LISA in June 2017 to max it out at the £4,000 limit.

At the end of the 2017/18 tax year, she gets a £2,125 bonus (£1,125 on the £4,500 saved before 5 April in the Help to Buy ISA and transferred in, plus £1,000 on the combined amount paid in to the Help to Buy ISA and the LISA in the 2017/18 tax year). Her LISA clock started in June 2017, so she'll be able to use the cash to buy her first home after June 2018."

So the MSE guide says yes, but Skipton (via their communications of how much allowance is remaining) say no. Another poster also had this from them a few days ago.

Might be worth raising for Monday's Martin Lewis Money Show on Help to Buy and Lifetime ISA's.

hbell86

I can see the contradiction. Even on the MSE website theres a contradiction on whether interest made this tax year counts towards your LISA allowance.

This says interest doesn't count
eg, if you put £1,000 in your Help to Buy ISA after 6 April 2017 then later that tax year transferred it into a LISA, you will only be able to add £3,000 more to your LISA.

This part seems to say interest does count towards your LISA allowance
Helen then transferred her Help to Buy ISA into a cash LISA once the first one came onto the market. She'd paid £600 in to it in the 2017/18 tax year, and been paid £50 in interest, so that counts towards her LISA allowance, meaning she had £3,350 of allowance left.

When I asked Skipton yesterday on what I could still invest this tax year into my LISA. They gave me a figure which clearly didn't include any of the interest I had made this tax year from Halifax H2B ISA or my Nutmeg Stocks and Shares LISA.

Can anyone clarify?

eskbanker

I've just answered your duplicate post on another thread, but as per post 1096 of this thread, the actual rules themselves are clear that interest earned in 2017/18 does count towards the 2017/18 LISA allowance, but this seems to be being ignored by some HTB and LISA providers when transferring.

I assume that at some point the discrepancy between actual behaviour and the rules will come to the surface and HMRC will cry foul but acting in accordance with what you're being told by the relevant providers seems a reasonable position to take for now....

Alexland

Also worth noting any interest, dividends or capital growth gained in your old LISA provider (Nutmeg) will not count as a LISA contribution. It's only interest earned in relation to this tax year in your HTB ISA that counts.