Lifetime ISAs guide

Chris4

Hey MoneySavers. Quick question about the H2B and LISA, given the deadline in a week, in relation to my particular scenario...

I have a Help To Buy with Halifax. Got £5.5k in there, been paying in for nearly two years. I'm 26, and started it in case I wanted to buy a house in future. It made sense with the 25% bonus. I still intend on doing so, maybe more ideally with a future partner, but I am now relocating to Australia for up to a year. As a result, it's possible I may need to dip into this money. This is safer in the H2B due to no fees, but I will also receive less bonus if I stay with this when I return to the UK and decide to buy a house.

1. Can I still transfer to a LISA in say 1 year and obtain the benefits then (albeit less than if I were to do so now)?
2. Should I consider transferring to a LISA now, despite the small hit on fees I may have to pay, due to the potential bonus outweighing this?

Thanks!

eskbanker

Chris4 wrote: »

1. Can I still transfer to a LISA in say 1 year and obtain the benefits then (albeit less than if I were to do so now)?

You can transfer in future years (subject to individual product/provider Ts & Cs) but will be constrained by the £4K annual contribution limit on LISAs so would need to stagger the transfer across multiple tax years if you don't complete it this tax year.

Chris4 wrote: »

2. Should I consider transferring to a LISA now, despite the small hit on fees I may have to pay, due to the potential bonus outweighing this?

Up to you - you'll earn 25% on all you put into a LISA but would lose 25% of anything withdrawn (i.e. the penalty is large than the original bonus, effectively being 25% of 125), so you'd need to weigh up the odds of needing to withdraw with those figures in mind.

Either way round, it would be worth opening a LISA and funding it with a token minimal amount just to get the clock ticking (given the need to have had one open for 12 months before use).

Alexland

Gareth1980s wrote: »

I've read through a lot of the forum I don't think this has been answered recently. I'm just looking for some quick advice so I'll keep it brief.

I have a HTB ISA, which I've paid into fully since launch.

I opened a stocks and shares LISA with £1 in April 2017 as per the MSE advice, which is currently being transferred over to Skipton to open my cash LISA. As I understand it, this means the LISA clock will still be registered as having started ticking in April 2017, so I will be able to use the money from the anniversary date in April 2018, is that correct? (Albeit with the caveat of the bonus not being paid until May 2018, which I'm aware of - I won't need the money before summer so that's fine).

My plan is to follow the original MSE advice of transferring the £1 over, then transferring the HTB over ASAP (I realize I've left this a little late!), and then top up from other savings to maximise the LISA bonus for the 2017/18 financial year.

I just want to double check this is still accurate advice - the last thing I want to do is transfer my HTB ISA over and then find that the LISA clock started Feb 2018 and that I can't access the account until Feb 2019!

The preservation of LISA initial contribution date on transfer is asked here almost every day. See below thread...

https://forums.moneysavingexpert.com/discussion/5798479

You have only a few days to get the HTB ISA transfer request into Skipton - not enough time to wait for the Nutmeg transfer to complete. I suggest you ask Skipton if they would be willing to process both concurrently. If you hear an answer please let us know.

Alex

Gareth1980s

Alexland wrote: »

The preservation of LISA initial contribution date on transfer is asked here almost every day. See below thread...



You have only a few days to get the HTB ISA transfer request into Skipton - not enough time to wait for the Nutmeg transfer to complete. I suggest you ask Skipton if they would be willing to process both concurrently. If you hear an answer please let us know.

Alex

Hi Alex,


Doh! Sorry, I know how frustrating it is to keep answering the same question. Just paranoid I guess. Thanks for the link - good idea re proving the initial date.


Shall do, thanks again!

Chris4

eskbanker wrote: »

You can transfer in future years (subject to individual product/provider Ts & Cs) but will be constrained by the £4K annual contribution limit on LISAs so would need to stagger the transfer across multiple tax years if you don't complete it this tax year.

Up to you - you'll earn 25% on all you put into a LISA but would lose 25% of anything withdrawn (i.e. the penalty is large than the original bonus, effectively being 25% of 125), so you'd need to weigh up the odds of needing to withdraw with those figures in mind.

Either way round, it would be worth opening a LISA and funding it with a token minimal amount just to get the clock ticking (given the need to have had one open for 12 months before use).

Yeah that's a good point... I can open one now, start putting into it whilst I'm abroad based on what I feel is affordable, to start the clock ticking as you say, and then when I get back in a year it'll be good to go when there's enough in it (up to £4k a year, so fairly quick). Thanks!

Edit: Opened it with £1 deposit

sully1311

DDD5 wrote: »

Hi
I am 40 in 2 weeks. Unfortunately my business went under & I had to sell my house 5 years ago to avoid going bankrupt. I have been renting since. I have nearly paid off all the debts (another year or so) & then I would like to buy again.
Would I qualify for the LISA as a first time buyer or not (if so I'll take one out now before I can't)?
Thanks

Sorry for your circumstances but you've bought a house in past so you're not a first time buyer I'm afraid.

Alexland

Chris4 wrote: »

Yeah that's a good point... I can open one now, start putting into it whilst I'm abroad based on what I feel is affordable, to start the clock ticking as you say, and then when I get back in a year it'll be good to go when there's enough in it (up to £4k a year, so fairly quick). Thanks!

I suggest you read the below important information if you are moving abroad temporarily. Also be aware the other country may not recognise your ISA as free from their tax rules...

https://www.gov.uk/individual-savings-accounts/if-you-move-abroad-or-die

bo_rai_cho

Alexland wrote: »

With a LISA the bonus is added into the account aligned to the contribution date so your solicitor does not need to claim a final bonus from the government. Your solicitor should be withdrawing the money by making contact with your LISA provider and providing the required declarations.

The fact they don't know this makes me worry they may not be an eligible conveyancer which would be a big problem.

Alex

They are eligible and a reputable firm, but I think she is just being difficult, she said the only facility she has it through a government portal and is reluctant to send a letter on my behalf which is partly infuriating not being able to get your solicitor to agree to send a letter. She says all monies need to paid by me to the solicitors account and HTB isas are claimed through the portal. However the Lifetime ISA government guidance clearly states the solicitor needs to contact the ISA provider to prove its for a house sale. Do I have room to go through their complains procedure?

Cieta

Hello. I’m currently saving in a standard savings account for a first time gone, and have thought about getting a LISA or help to buy ISA. However I’m unsure if I’d qualify. Basically I’ve never owned anything, however when I come to buy my first property it will be with my partner who has owned a property. Does anyone know if that affects my ability to be eligible for one of these schemes? Any help/advice would be great.

Alexland

bo_rai_cho wrote: »

They are eligible and a reputable firm, but I think she is just being difficult, she said the only facility she has it through a government portal and is reluctant to send a letter on my behalf which is partly infuriating not being able to get your solicitor to agree to send a letter. She says all monies need to paid by me to the solicitors account and HTB isas are claimed through the portal. However the Lifetime ISA government guidance clearly states the solicitor needs to contact the ISA provider to prove its for a house sale. Do I have room to go through their complains procedure?

Point them to the guidance, you don't want to fall out with your solicitor.