Lifetime ISAs guide

eskbanker

ciaomagre wrote: »

Thanks for replying, sorry I should have explained myself better. I have already paid in this year's £4k so I am expecting to get the £1k bonus or before 4 May 2018 already. On the 6th of April, I want to pay in another £4k lump sum at the start of the tax year. From that point on the bonus is paid monthly, so my question is - will that first monthly bonus payment be £1k? So basically I can expect to receive £2k for "free" at some point in May this year?

Yes, although it'll be two separate payments - you'll receive the first £1K bonus (pertaining to 2017/18 contributions) in late April or early May, and then the second £1K (for the April £4K lump sum) in late May or early June.

bowlhead99

ciaomagre wrote: »

Thanks for replying, sorry I should have explained myself better. I have already paid in this year's £4k so I am expecting to get the £1k bonus or before 4 May 2018 already. On the 6th of April, I want to pay in another £4k lump sum at the start of the tax year. From that point on the bonus is paid monthly, so my question is - will that first monthly bonus payment be £1k? So basically I can expect to receive £2k for "free" at some point in May this year?

Sounds about right. That's how it's supposed to work. Put in £4k per normal tax year, get £1k credit to the account. The first year of operation of the regime doesn't do the bonus claim until the end of the year by which time they know what you contributed or transferred in and do a bonus claim on the whole lot. Makes it easier for the providers who are just trying to get their systems up and running From Apr 2018 they move to a more 'real time' basis (within reason -allowing a reasonable time to process the claim). So if you pay in right at the start of the 2018/9 year you'll get all your bonus shortly thereafter and no more contributions or bonuses allowed until 2019/20.

lawrence3au

Hi there, i'm new here!
Sorry if this has been a topic of discussion before but i'm trying to work out to how to maximise my savings. I've got every intention of buying a house, once I've saved enough money, so in a fair few years.

I'm currently saving £200 per month into a Help to Buy ISA at 3.5% interest per year and don't know whether to change that to Skiptons LISA at 0.75% interest per year. I know the 25% government bonus is on contributions only.

My question is, could i save the £200 in Help to Buy ISA say Aprl to February to earn the 3.5% for 11 months, then withdraw/ transfer it to the Skipton each year in time for the end of year cut off, then receive the 25% on that one contribution? Instead of getting it monthly? I think this would work out slightly (every little helps) more financially than getting 0.75% on monthly contributions.

Would that work, is that allowed?

I'm never going to save 20k each year, so will never be near the allowance.

Help to Buy - 11 months @ £200 = £2200 at 3.5% AER then transfer say £2250 (inc interest) to LISA to get 25% bonus on £2250 = total £2812.50
or
LSA - 12 months @ £200 = £2200 at 0.75% AER = £2220 ish (inc interest) plus 25% of £2200 = £550 + £2220 = £2770

Does that make sense? Theres about £40 difference...
Thanks for your help.

Alexland

If you are considering switching to a LISA strategy how much do you currently have in your HTB ISA? Although it is probably too late to transfer this tax year you could withdraw up to £4k and add it to the LISA before the end of this tax year on 5th April provided you remain within the annual £20k contribution across all ISA types allowance.

Yes as the Skipton rate is low it generally makes sense to make the £4k deposit towards the end of each tax year and save somewhere else (such as a HTB ISA or a 5% regular saver) in the meantime. Just don't cut it too close to the deadline incase there is an unexpected problem making the LISA contribution.

Alex

lawrence3au

Thanks Alex, I just didn't know if the money had to be in the LISA for a certain amount of time to get the bonus, or if its a case of whatever is in there on the last day of the financial year gets the bonus.
I appreciate I've missed it this year, so will start it from next year.
Thanks again.

Alexland

lawrence3au wrote: »

Thanks Alex, I just didn't know if the money had to be in the LISA for a certain amount of time to get the bonus, or if its a case of whatever is in there on the last day of the financial year gets the bonus.
I appreciate I've missed it this year, so will start it from next year.
Thanks again.

No the bonus value isn't based on when in the tax year you make your contribution - just that the contribution was made during the tax year.

You really haven't missed this tax year if you just want to deposit money (rather than asking the providers to perform a transfer). If the product is suitable for your needs then the more money you can get into your LISA each tax year the better. Why not try and get something in for this tax year?

Alex

[Deleted User]

Alexland wrote: »

Whoever you spoke to was misinformed, you are allowed to contribute up to £20k total per year across the 4 types of adult ISA (observing the special contribution limits that apply to HTB and LISA).

1) Cash ISA (inc HTB ISA)
2) S&S ISA
3) Lifetime ISA (cash or s&s)
4) IF ISA

So adding £4k to the LISA and £16k into one of the other 3 types of ISA would be fine.

Maybe they thought a LISA in cash was a type of Cash ISA such as a HTB ISA.

Still if they don't sell the LISA you can't blame them for not being trained on it.

Alex.

Hi Alex,

My HTB Balance [inc 2016/2017 contribution] was just transferred to the LISA and the account is now closed. Can I in this case make any contribution to my normal Cash ISA for this tax year? Is the remaining ISA allowance for tax year 2016/2017 £16,000? Many Thanks!

Alexland

[quote=[Deleted User];74069426]My HTB Balance [inc 2016/2017 contribution] was just transferred to the LISA and the account is now closed. Can I in this case make any contribution to my normal Cash ISA for this tax year? Is the remaining ISA allowance for tax year 2016/2017 £16,000? Many Thanks![/QUOTE]

Yes if your HTB ISA was transferred to another type of ISA then it will appear to HMRC as if you had made your contributions to the other type of ISA for the whole of this tax year. As such you can open a Cash ISA and make contributions.

Alex.

ellychoppy123

I've been struggling to find much information on this that relates to next tax year. Most information posted seems to be tailored around pre-launch of the LISA (which clearly I am a little late to).

Extract from Skipton's website:

Our window to transfer an ISA into a Lifetime ISA has now closed for the 2017/18 tax year. You can still make the most of your £4,000 annual Lifetime ISA allowance by paying in before end of the tax year on 5 April 2018.
Any money you pay in will count towards your £4,000 annual Lifetime ISA allowance and you’ll receive a 25% government bonus on your contributions.
We will allow transfers in to your Lifetime ISA in the new tax year.

Maybe I'm being overcautious, but I don't find this 100% clear if I can transfer in after I have stated paying in.

Does anybody know if I can open a LISA this tax year, and pay in the full £4000 from my normal savings. Then when we roll into the next tax year, transfer my help to buy ISA in?
How does the transferred H2B count towards the £4000/yr limit?
Can I top it up any further in that year?

Cheers :money:

eskbanker

ellychoppy123 wrote: »

Does anybody know if I can open a LISA this tax year, and pay in the full £4000 from my normal savings. Then when we roll into the next tax year, transfer my help to buy ISA in?
How does the transferred H2B count towards the £4000/yr limit?
Can I top it up any further in that year?

You can open a LISA this year and fund it up to £4K (if you're quick enough), and then you can transfer your HTB in after 6 April, but the HTB money does count towards your £4K annual LISA limit once we're into the 2018/19 tax year, so if you have more than that in your HTB you'd have to transfer it over more than one tax year.