Lifetime ISAs guide

parker1982

Just needing to double check my working out regarding the LISA withdrawal charge.
For ease of calculations assume no interest is paid and the maximum deposit is made each year into a band new LISA with no transfers from a HTB ISA:

2017/18, deposits are £4000, bonus of £1000, final balance £5000, withdrawal charge would be £1250. This would make a loss of £250.
This is based on a balance of £5000 less deposits to date of £4000 less the withdrawal charge of £1250.

2018/19, deposits are £4000, bonus of £1000, final balance £10000, withdrawal charge would be £2500. This would make a loss of £500.
This is based on a balance of £10000 less deposits to date of £8000 less the withdrawal charge of £2500.

So if you did need to withdraw the money instead of using for a home / retirement, the maximum you would lose would be 6.25% of whatever you've deposited? I think I'm right but just wanting to check.

Edmonstead

Firstly, apologies if this has already been discussed on this forum.
I have a help to buy isa with Halifax, a stocks and shares LISA with nutmeg which was opened on 11/04/2017 and also normal savings in my bank (as I didnt want to risk all of my savings in the stocks and shares) I am looking to open the cash Lisa with Skipton, am I able to transfer all three into one?
Any help would be greatly appreciated.
Thanks

Kim_13

parker1982, you are correct. The 25% withdrawal charge works out as losing 6.25% of your own savings.

Edmonsted, I can't see anything that would prevent you from doing this. Additional savings being moved into your LISA from your bank account would be subject to the £4,000 limit per tax year (there is no monthly limit so you can do it all in one transaction if you wish.) Skipton have set an earlier deadline of 1 March to transfer in a Help to Buy ISA though (as the scheme only allows a Help to Buy ISA to be transferred into a Lifetime ISA until the end of the current tax year.)

So, I would approach Skipton and ask them how long it would take to transfer in your S&S LISA. If it would be cutting it fine to be able to meet the HTB deadline, transfer your HTB into the S&S LISA and then transfer the S&S to the Cash LISA. You can hold off putting in the additional savings until it's all in cash if you wish, subject to the annual limit above.

There is no HTB withdrawal penalty so if the deadline was missed you could still get back all of the money, but it would all count towards the LISA contribution limit when putting it in.

mjp89

Again, sorry if this has already been clarified, but I'm really confused about LISA transfers. I have the Nutmeg LISA and Halifax H2B. I've opened the Skipton LISA and just posted the form to transfer Nutmeg. Do I have to wait for the Nutmeg LISA to transfer over before I can transfer in the H2B?

hbell86

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....

I have contacted Skipton again, and they assure me that the interest made from my H2B ISA this tax year will not count towards my 4K LISA allowance.

Alexland

mjp89 wrote: »

Again, sorry if this has already been clarified, but I'm really confused about LISA transfers. I have the Nutmeg LISA and Halifax H2B. I've opened the Skipton LISA and just posted the form to transfer Nutmeg. Do I have to wait for the Nutmeg LISA to transfer over before I can transfer in the H2B?

It's probably ok to get both transfers going concurrently but ask Skipton to be sure they are happy with the situation.

Alexland

hbell86 wrote: »

I have contacted Skipton again, and they assure me that the interest made from my H2B ISA this tax year will not count towards my 4K LISA allowance.

Ok but that disagrees with this letter from the Treasury

https://www.whatdotheyknow.com/request/398974/response/966594/attach/2/TO%20TO2017%2008177.pdf

ebamabbs

Hi All,

I have a H2B ISA with Barclays with £6200 in. It looks like the house we are going to buy will be around the £290,000 mark in Kent so I won’t be entitled to the bonus. If I transfer to a LISA now, will I still get the bonus and be able to use it to buy as long as it’s after April? Or can this not be used until it’s been in the LISA for a year?

Hope that makes sense and thanks for any advice!

asacarter

Who checks to see if you have ever had a mortgage before and how do they check?

Alexland

ebamabbs wrote: »

I have a H2B ISA with Barclays with £6200 in. It looks like the house we are going to buy will be around the £290,000 mark in Kent so I won’t be entitled to the bonus. If I transfer to a LISA now, will I still get the bonus and be able to use it to buy as long as it’s after April? Or can this not be used until it’s been in the LISA for a year?

The LISA needs to be open 12 months after the first contribution before it can be used with bonus to purchase a property. Otherwise it's an early withdrawal so loss of bonus and small penalty. There is no penalty for this tax year.