Lifetime ISAs guide

eskbanker

Grahmb65 wrote: »

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.

Without having seen the TV programme, it's clear from the subsequent forum posts that it was (inevitably) a very superficial piece that won't have gone into anything like enough detail for people to decide what's right for them. If they don't already do so, on the programme they ought to point people towards the articles on here in order to do some more thorough research, and even then they're far from comprehensive - the official ISA rules are 361 pages and summarising every nuance within them would clearly be impractical!

However, the main LISA piece on here has a section within it (https://www.moneysavingexpert.com/savings/lifetime-ISAs#pension2) comparing LISA versus pension, and in particular taxation. Your point about money coming out of a LISA not being taxable while income from a pension is taxable is largely true, but only tells half the story, because it's the opposite on the way in, i.e. you fund a LISA from money that's already been taxed whereas you can fund a pension from pre-tax income (or effectively so with rebates).

So, as a very broad rule of thumb, both methods will result in roughly the same amount of tax overall, but there are so many variables that you need to work out what's right for you and your own circumstances rather than being overly swayed by generalisations....

Battersea174

Woodaaay wrote: »

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?

I just received the following in a letter from Nationwide:

You have requested a full transfer from your existing Help to Buy account including all the funds you've invested this tax year (06 April 2017 - 05 April 2018). However, you have also invested funds in the other ISA account you hold with Nationwide. HMRC regulations do not permit current tax year's subscriptions to be split between different ISA providers.

To allow us to proceed with your ISA transfer, you will need either to transfer all the current tax year's subscriptions, this would mean submitting a new application form to transfer the funds from your Save to Buy ISA as well, or transfer the previous tax years' subscriptions only from your Help to Buy ISA.

Will it just be a case of informing them that I'm transferring to a Lifetime ISA and therefore I won't have two cash ISAs with different providers?

Alexland

Battersea174 wrote: »

Will it just be a case of informing them that I'm transferring to a Lifetime ISA and therefore I won't have two cash ISAs with different providers?

The problem is that you are not allowed to transfer part of your split Cash ISA contributions for this year into another type of ISA. Under ISA rules you must transfer both parts which may not be possible (without partial withdrawal from the regular part) if it exceeds the LISA limit for this year.

Alex

bigroundorange

Hi


I am looking into transferring my Help to Buy ISA into a Lifetime ISA.


If I transfer this tax year, then the original Help to Buy ISA would no longer exist (right?).


Would I be able to open a brand new Help to Buy ISA next tax year (i.e., from April 2018 onwards)? If so, could I open it with £1200 (rather than just £200), given that the first Help to Buy ISA account does not exist anymore? Would I still be able to get the full bonus on the LISA (with the original Help to Buy ISA amount transferred in)?


I am a first time buyer, but not in a position to buy yet and so do not know what value property I will buy in the future.


Thank you in advance.

Alexland

bigroundorange wrote: »

I am looking into transferring my Help to Buy ISA into a Lifetime ISA.

If I transfer this tax year, then the original Help to Buy ISA would no longer exist (right?).

Would I be able to open a brand new Help to Buy ISA next tax year (i.e., from April 2018 onwards)? If so, could I open it with £1200 (rather than just £200), given that the first Help to Buy ISA account does not exist anymore? Would I still be able to get the full bonus on the LISA (with the original Help to Buy ISA amount transferred in)?

I am a first time buyer, but not in a position to buy yet and so do not know what value property I will buy in the future.

Yes if you fully transfer the HTB ISA into a LISA (to get a bonus on the total amount) it seems likely your old provider will close the empty account but check their terms. Sure you can open another HTB ISA next tax year to benefit from the good interest rate but you can only use one account (probably the LISA to avoid withdrawal penalty) with the bonus against a qualifying property purchase.

Alex

Kreacher

Hello all,

Can someone please check my understanding so that I know I'm not adding too much into my Lisa?

I had a HTB which I've maxed out every month including the initial month and then opened a Nutmeg LISA with £100 when they became available.

I transferred my nutmeg LISA to Skipton followed by my HTB (£6,481.60) and my current LISA balance is £6581.57

In March 2017 my HTB balance was £4495.03, meaning this year I've added 2,086.44 (£6581.57 - £4495.03).

Meaning that I can top up my LISA by £1,913.56 before April (£4000-£2,086.44)?

Thanks for your help!

rajeshwarsrm

Hello guys, want some guidance from you.

I have asked my Nutmeg LISA to be closed today and it will take another 5 to 7 working days for the amount to reach my account. Yesterday I opened a AJ Bell LISA with 2000 £ in it. I realised after going through the forum that we are not allowed to have money in more than one LISA in a calendar year. So if there is a week in which I have money in both Nutmeg and AJ Bell LISA, is it going to be an issue? If so, what do you reckon I do? Thanks.

livelaughlovedancesing

Woodaaay wrote: »

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?

Hi Woodaay, did you find an answer to this in the end? Can't see one in the thread.

Alexland

rajeshwarsrm wrote: »

Hello guys, want some guidance from you.

I have asked my Nutmeg LISA to be closed today and it will take another 5 to 7 working days for the amount to reach my account. Yesterday I opened a AJ Bell LISA with 2000 £ in it. I realised after going through the forum that we are not allowed to have money in more than one LISA in a calendar year. So if there is a week in which I have money in both Nutmeg and AJ Bell LISA, is it going to be an issue? If so, what do you reckon I do? Thanks.

It would have been better if you had sought some feedback before closing the Nutmeg LISA - suggest you contact them urgently and ask they do not close the account.

You should have opened the AJ Bell LISA and raised a request with them to transfer the old Nutmeg LISA across. That way the same LISA would move between providers and you could have continued contributing up to the annual limit.

If you close the Nutmeg LISA, and given they required an initial contribution, you are not allowed to contribute to the AJ Bell LISA in this tax year. The new tax year stars 6th April.

Alex.

Dai11

Hi,


I opened a lifetime ISA in April 2017, and I am in the process of purchasing a new build property which will be completed in June or July of this year. Exchange is set to be around late March.


Do I have to use my lifetime ISA at exchange (effectively ruling me out of any bonus) or can I wait until prior to completion (and claim the 25% in April?


Thanks,