Lifetime ISAs guide

PGorg

Hi everyone 😊 Hope you all are well.

New to the site and have some doubts regarding LISA.

I started last year, August with Skipton 1£ to make the clock start running.

I need to move in a couple of moths for a bigger house, however I do not have enough money for the deposit. I thought of going first to a lodge, keep saving for a deposit and them move for a bigger house. However I don't know if I will be eligible to use the money kept on the LISA for buying my first house.

Thanks for your help.

Alexland

I don't quite understand the nature of the lodge - would you have a legal interest in the land? Certainly things like mobile houseboats do not qualify as property for the purpose of a HTB ISA or LISA.

danvin89

Hi,

I'm struggling to get my head around the transfer of money from HTB ISA to LISA in order to get the most out of it.
I have £4000 saved in a HTB ISA, as well as other money saved in other accounts. I am not looking to buy anytime soon.
Am I right in thinking that if I transfer the HTB money into a LISA, before 1st March (Skipton deadline) it does not count against the £4000 limit for 2017/18, and therefore I could also transfer £4000 more in from my other savings before the end of 2017/18 year (April) which would count against this year?

Any guidance is much appreciated.

Thanks,
Dan

Alexland

danvin89 wrote: »

Am I right in thinking that if I transfer the HTB money into a LISA, before 1st March (Skipton deadline) it does not count against the £4000 limit for 2017/18, and therefore I could also transfer £4000 more in from my other savings before the end of 2017/18 year (April) which would count against this year?

It is a bit complicated - from the evidence on the thread even the financial institutions cannot get their head around this.

Basically any contributions or interest earned (but maybe not paid until later) in relation to previous tax years will not count towards the £4k contribution limit this year.

As such any HTB ISA contributions you have made since 6th April 2017 or any interest earned on the whole balance since 6th April 2017 will errode the ability to deposit £4k.

It is possible you will have an interest payment from your HTB provider during this tax year (and possibly another on account transfer). In which case you will have to ask them how much of the first interest payment this tax year was earned in the previous tax year. You will then know how much of the interest payment(s) relate to this tax year.

Alex

danvin89

Alexland wrote: »

It is a bit complicated - from the evidence on the thread even the financial institutions cannot get their head around this.

Basically any contributions or interest earned (but maybe not paid until later) in relation to previous tax years will not count towards the £4k contribution limit this year.

As such any HTB ISA contributions you have made since 6th April 2017 or any interest earned on the whole balance since 6th April 2017 will errode the ability to deposit £4k.

It is possible you will have an interest payment from your HTB provider during this tax year (and possibly another on account transfer). In which case you will have to ask them how much of the first interest payment this tax year was earned in the previous tax year. You will then know how much of the interest payment(s) relate to this tax year.

Alex

Thanks for this Alex. Looking at my HTB ISA I was paid interest last March 2017.

So if I understand you correctly - I have saved £200 a month since 6th April which totals £1800. So that £1800 + interest will count towards the 2017/18 year. The other £2200 from the HTB ISA would not count against 2017/18 but would earn a bonus.
So with regards to my other savings, I could top up the £1800 + interest with this to a max of £4000. Therefore I'd have £6200 in the LISA before 6th April 2018, which would all be eligible for a bonus. Is that right?

Thanks again,
Dan

Alexland

danvin89 wrote: »

Thanks for this Alex. Looking at my HTB ISA I was paid interest last March 2017.

So if I understand you correctly - I have saved £200 a month since 6th April which totals £1800. So that £1800 + interest will count towards the 2017/18 year. The other £2200 from the HTB ISA would not count against 2017/18 but would earn a bonus.
So with regards to my other savings, I could top up the £1800 + interest with this to a max of £4000. Therefore I'd have £6200 in the LISA before 6th April 2018, which would all be eligible for a bonus. Is that right?

So yes if you have added £1800 to the HTB this tax year before it transfers (more might be added if you have a regular payment setup) then you can contribute nearly £2200 more (a bit less as you discount interest earned this year) into the LISA which would all get a 25% bonus.

Alex

PGorg

Alexland wrote: »

I don't quite understand the nature of the lodge - would you have a legal interest in the land? Certainly things like mobile houseboats do not qualify as property for the purpose of a HTB ISA or LISA.

Thanks Alexland. To be honest, I don't know if I will have legal interest on the land. I can ask when I start on viewings. do you have any idea where I can confirm this information? If I own a lodge, will I be able to use LISA to buy my first house?


Regards

Pedro

Alexland

PGorg wrote: »

Thanks Alexland. To be honest, I don't know if I will have legal interest on the land. I can ask when I start on viewings. do you have any idea where I can confirm this information? If I own a lodge, will I be able to use LISA to buy my first house?

Do you have any details of the 'lodge' that you could share? Are you talking about lodgings (where you rent a room in a shared property) or actually buying a property?

You would usually know if you are aquiring an interest in land as it is usually very expensive.

Alex

Grahmb65

Dear Martin,

Regarding your recent programme on Lifetime Isa verses a Pension, you implied that in general a pension would be better because of employer contributions, which, I agree is correct. But you didn't mention that the money from a pension is taxable and the money from a Lifetime isa is all tax free, which, I feel, could make a big difference. Especially for someone who has a state pension which uses up most of the tax allowance, so any extra income from a pension would be all taxed at 20% which is not the case with a LISA.


Your Sincerely


Graham

Alexland

Grahmb65 wrote: »

Dear Martin,

Graham I am not sure Martin reads all the hundreds of thousands of forum posts.

Alex