Lifetime ISAs guide

bowlhead99

dtl wrote: »

Is it just me, or are the lifetime isa rules age discrimination?

It is simply that younger people are being offered something that older people are not. Some older people (like you?) will get to retire with a state pension before age 68; those under 40 probably not. Some older people (like you?) were able to have some of their pension earned under a final salary scheme while younger ones less likely to. One of the perks of the LISA is some bonus money towards a property. The older ones (like you?) already had time to acquire a property when properties cost a lower multiple of average salaries than they do now. The younger people will be the ones whose productivity will be keeping the country going after the older ones (like you?) have retired. Do you really begrudge them all these schemes so much?

Many of us over 40 had our retirement plans absolutely hammered when our employers unceremoniously kicked us out of final salary pensions, got kicked in the teeth when the government allowed employers to index what little value we had in our now deferred final salary pensions to CPI instead of RPI

I am over 40 so won't qualify for a LISA.

I, like many my age and the vast majority under 40, wasn't lucky enough to have my retirement plans 'hammered' when my employer 'unceremoniously' stopped me having access to defined benefits for future pension accrual; I have never had access to a defined benefits scheme in the first place.

I can't resent the employer deciding that the value of those defined benefits should be usefully indexed by CPI instead of using the lucrative RPI measure, because I don't have any of my workplace pension being paid under a defined benefit scheme. I don't have any guaranteed benefits capable of being indexed by either measure.

So, please stop being envious of others and realise that you have stuff that they don't.

and now we're getting shafted by them because we're being locked out of the LISA!

So, use a conventional pension to put money away to retirement. You will be able to access it before age 60, unlike the LISA.

And when you are drawing your state pension before the age of 68, which someone under age 40 now does not expect to be able to do, you can sit back and marvel that your ability to draw the state pension at age 66 or 67 is something that is worth several thousand pounds more than the £0 a year that today's under-40-year old will get when they are age 66 or 67, because they had the misfortune to be born after 1976... Would you like to reverse that age discrimination that works in your favour, and have your state pension denied to you for another year?

Tom_Hendo

Hi MSE

I have a slight query about the LISA and the HTB ISA link.

So I have a HTB ISA. If i want to contribute into the LISA I presume I shouldnt put any money into the HTB ISA from April?

Secondly I have a question relating to Point 6 on the MSE Article. I will have just over £4200 in my HTB ISA by April 1st. If I open a LISA in April and deposit £4000, am I right in thinking I can also transfer the £4200 into my LISA for a total balance of £8200, which will get 25% bonus added on after the first year (£2050) then a maximum of £4000 from April 2018 getting the 25% bonus (£1000). If this is the case thats really good, if it is not then I do not see the point in being able to transfer the HTB as well as deposit your years allowance into the LISA?

Cheers,

Tony_H55

Can I ask forumites opinions on this? My daughter is paying into a HTB ISA which currently pays 4% pa interest. She will also be able to pay in a lump sum of £4000 into a LISA in the 2017-18 tax year. She will not be buying a house for a few years yet. Assuming LISA rates are likely to be much lower than 4%, if I understand the rules she should keep paying into the HTB ISA at least while the rate is so good but otherwise into the highest rate paying account available. She can transfer the money she has paid into the HTB ISA (up to 5th April 2017) into the LISA at any time until 5th April 2018 and she will still get the 25% bonus on that. Furthermore she could wait until the 5th April 2018 to pay in the £4000 and a day later get the 25% bonus on that. Any further sums she has paid into the HTB ISA (max £2,400 possible) could be paid into the LISA in the following tax year 2018-2019. Am I correct in these assumptions?

bowlhead99

Tony_H55 wrote: »

Am I correct in these assumptions?

Any contributions she has made into the HTB ISA prior to 6 April 2017 can be transferred into a LISA during 2017/18 tax year without affecting LISA allowance.

Any contributions she has made into the HTB ISA during 2017/18 tax year can also be transferred into the LISA during 2017/18 but they will reduce the LISA allowance by the amount she contributed.

So for example if she transfers into a LISA during 2017/8 her HTB ISA containing £6000 (of which £2400 is 2017/8 year money and £3600 is prior year money) then she can do another £1600 directly into the LISA to top off her 2017/18 contributions to the £4k level. She would be left with the maximum amount possible in the LISA, receiving the bonus at 6Apr 2018.

Your idea of not moving the whole HTB into the LISA during the 2017/18 window means that when she does get around to transferring it over in 2019 it will all (including interest) count against her 2019 subscription allowance, just like a contribution from any other source. Whereas if you transfer it in during 2017/18 only the 2017/8 contributions count against that year's £4k allowance.

If she is going to carry on saving outside LISA and later transfer it in during 2018/9, she might perhaps be better off using non-ISA "regular saver" accounts for that purpose, e.g. Nationwide pay 5% on up to £500pm, which is better than 4% on £200pm.

bowlhead99

Tom_Hendo wrote: »

So I have a HTB ISA. If i want to contribute into the LISA I presume I shouldnt put any money into the HTB ISA from April?

You *can* contribute into the HTB and transfer it over later, but it will come out of the £4k allowance for 2017/8, so if you are going to do a £4k lump into the LISA for 2017/8, don't also put further contributions into the HTB in 17/8 if the goal is to ultimately move them into the LISA.

Secondly I have a question relating to Point 6 on the MSE Article. I will have just over £4200 in my HTB ISA by April 1st. If I open a LISA in April and deposit £4000, am I right in thinking I can also transfer the £4200 into my LISA for a total balance of £8200, which will get 25% bonus added on after the first year (£2050)

Yes, you can do that.

then a maximum of £4000 from April 2018 getting the 25% bonus (£1000)

Yes you can do that.

If this is the case thats really good, if it is not then I do not see the point in being able to transfer the HTB as well as deposit your years allowance into the LISA?

It is the case, so hopefully you are sorted.

Basically 2017/8 is your window of opportunity to move the entire contents of your HTB into your LISA to get the maximum amount of future bonus for house-buying. If the transfer only contains pre 6/4/2017 contributions, you still have £4k of LISA contribution allowance for 17/18. If the transfer contains some 2017/18 contributions as well, those contributions get knocked off the £4k LISA contributions allowance for 2017/18

thefeederfish

I've got a question about how the LISA bonus is calculated.

I'm wanting to keep my £4,000 in a current account earning higher interest than what it would earn in the LISA until March 2018, then drop it all into a LISA before the end of the tax year. I will open a LISA as soon as possible in April and pop £100 in there to make it active.

Will I get the full £1,000 bonus doing it this way?

guitarman001

My partner has terminal cancer and we're buying a house.

I've been saving in a HTB ISA but the property costs £253k and I see no government bonus is paid on houses costing more than £250k. This is garbage!!

So, if I transfer to a LISA, I understand I need to wait 12 months to get any bonus. But we're buying in June-August timeframe. So this is garbage!!

I understand that for either of these, the money has to go toward the deposit, which would be in June-August for me... so it's not like I can use it later on?

Hypothetically if I were able to use the HTB bonus could I still open a LISA and get the bonus from that on retirement?

Finally, I'm 32. Do you think it's a good deal or not to use a LISA as part of a pension plan? If you're a higher-rate taxpayer, are you better off chucking it in your normal pension?

Tony_H55

bowlhead99 wrote: »

Any contributions she has made into the HTB ISA prior to 6 April 2017 can be transferred into a LISA during 2017/18 tax year without affecting LISA allowance.

Any contributions she has made into the HTB ISA during 2017/18 tax year can also be transferred into the LISA during 2017/18 but they will reduce the LISA allowance by the amount she contributed.

So for example if she transfers into a LISA during 2017/8 her HTB ISA containing £6000 (of which £2400 is 2017/8 year money and £3600 is prior year money) then she can do another £1600 directly into the LISA to top off her 2017/18 contributions to the £4k level. She would be left with the maximum amount possible in the LISA, receiving the bonus at 6Apr 2018.

Your idea of not moving the whole HTB into the LISA during the 2017/18 window means that when she does get around to transferring it over in 2019 it will all (including interest) count against her 2019 subscription allowance, just like a contribution from any other source. Whereas if you transfer it in during 2017/18 only the 2017/8 contributions count against that year's £4k allowance.

If she is going to carry on saving outside LISA and later transfer it in during 2018/9, she might perhaps be better off using non-ISA "regular saver" accounts for that purpose, e.g. Nationwide pay 5% on up to £500pm, which is better than 4% on £200pm.

Thanks. What I was really getting at was that unless someone is planning to buy a house in the first couple of years there is probably no advantage in putting any money into a LISA until just before the end of the 2017-18 financial year unless the rates are better than available elsewhere. (As I understand the bonus is paid irrespective of when, in the financial year, the payments are made into the account).
The Nationwide account is a good deal but of course requires a current account to be held, otherwise it only pays 2% for regular savings.

alewin

thefeederfish wrote: »

I've got a question about how the LISA bonus is calculated.

I'm wanting to keep my £4,000 in a current account earning higher interest than what it would earn in the LISA until March 2018, then drop it all into a LISA before the end of the tax year. I will open a LISA as soon as possible in April and pop £100 in there to make it active.

Will I get the full £1,000 bonus doing it this way?

I was going to ask the same thing, in the first year is the 25% bonus calculated on the amount in the LISA account on the last day of the financial year, 5 April 2018?
Is that why Martin said on his TV show this week to just open a LISA account in April, even with a £1 then add to it later?

Thanks.

bclark1605

I am looking to re-mortgage in 5 years. The house is solely in my name. If we get a joint mortgage can my wife use the new Lifetime ISA to fund her half of the mortgage and claim the 25% bonus? She has never owned a house before in her name and is under 40.


Thanks
Brian