Lifetime ISAs guide

rhodesmjr

The Moneybox LISA variable interest rate is dropping from 1.4% to 1.25% on the 1st April 2020 to reflect the drop in Bank of England base rate from 0.75% to 0.1%, according to the latest email received from them today. I feel it could have been worse!

Ketceo

I need advice on the following scenario please:-
- Cash ISA with one provider, first deposit on 21/12/2018 and no further deposits since 30/09/2019. The Cash ISA is still open and accruing interest;
- No deposit in the Cash ISA above, because opened a HTB ISA with the same provider. HTB ISA first deposit on 24/10/2019;
- The above provider is not the Moneybox;

- Today, 29/03/2020, opened a LISA with Moneybox, and planning to make a first deposit, which I assume will clear in the week commencing 06/04/2020 so classified as next Tax Year 2020-21;

So, I need to know if I have breached any ISA rules?, or would it be better I transfer the remainder of Cash ISA monies into the Moneybox LISA?

masonic

Ketceo said:

So, I need to know if I have breached any ISA rules?, or would it be better I transfer the remainder of Cash ISA monies into the Moneybox LISA?

No, a Lifetime ISA is a different type of ISA, so you can pay into that and a cash ISA in the same tax year.

Alexland

If you contributed to both a Cash ISA and a HTB ISA (a type of Cash ISA) with the same provider in the same tax year (during late 2019) then that would only be allowed if the provider was operating a Split Cash ISA (eg Nationwide) where both account contributions were reported to HMRC as a single account.

DaireMcG

Hi, 
I have read through many pages on this forum that speak about LISA Exit Fees, but there is still something I am unclear about. The description makes clear that there is a 25% penalty for withdrawing money other than post-60 or buying a home.
Yet it seems this applies only to Cash LISAs and not to S&S LISAs, is that correct?
All the S&S LISAs mentioned as Best Buys say something like: "Exit/transfer fees: None if transferred out as cash, otherwise £25 per holding transferred out" So there is no 25% penalty?
I ask because I would like to buy a house later this year (already have HTB ISA) but would like to earn 1k bonus for this tax year (plus whatever earnings from stocks and shares) - I can then withdraw the sum with no exit fee, correct? Whereas a Cash LISA would have an exit fee.
Or have I got this wrong and the penalty and exit fee are two totally different things?

kuratowski

DaireMcG said:

Or have I got this wrong and the penalty and exit fee are two totally different things?

This.  The government withdrawal penalty and the exit fee are two totally different things.

eskbanker

DaireMcG said:

Hi, 
I have read through many pages on this forum that speak about LISA Exit Fees, but there is still something I am unclear about. The description makes clear that there is a 25% penalty for withdrawing money other than post-60 or buying a home.
Yet it seems this applies only to Cash LISAs and not to S&S LISAs, is that correct?
All the S&S LISAs mentioned as Best Buys say something like: "Exit/transfer fees: None if transferred out as cash, otherwise £25 per holding transferred out" So there is no 25% penalty?
I ask because I would like to buy a house later this year (already have HTB ISA) but would like to earn 1k bonus for this tax year (plus whatever earnings from stocks and shares) - I can then withdraw the sum with no exit fee, correct? Whereas a Cash LISA would have an exit fee.
Or have I got this wrong and the penalty and exit fee are two totally different things?

Your last sentence sums it up - you have got it wrong and they are different things....

Withdrawal penalties apply equally to cash or S&S LISAs so the latter doesn't circumvent them in any way.  These penalties relate to withdrawing money to your current account or transferring to a non-lifetime ISA.

Exit fees for S&S (L)ISAs are levied by some providers for transferring or withdrawing investments, but these are over and above any LISA-specific withdrawal penalties.

The bottom line is that if you don't currently have a LISA and you want to buy a first property within a year then you can't benefit from the 25% LISA bonus....

DaireMcG

Thanks kuratowski and eskbanker.
I could have started with the final sentence and saved myself a bit off writing, haha.
To clarify another point, you can have two LISAs (1 Cash, 1 S&S), just cannot pay into them both in the same tax-year?

Alexland

DaireMcG said:

To clarify another point, you can have two LISAs (1 Cash, 1 S&S), just cannot pay into them both in the same tax-year?

You can but it would be very unusual. Cash LISAs are for people saving to buy a property soon and S&S LISAs are for people investing for age 60+ or a property purchase 5+ years in the future.
Most people saving for a property in a Cash LISA are probably best just using a pension for any parallel retirement investing.

Blackbriar_040

Evening, all.
For everyone with a LISA with Skipton Building Society!
From the 23 April the interest rate for the Online Cash Lifetime ISA is reducing from (1.00% to 0.35%!)

From the letter I recieved today!
"We're writing to let you know that we'll be reducing the interest rate on your savings account below on 23 April 2020. This is in line with the reasons for varying rates set out in our current Savings Account Terms and Conditions"

Current Interest Rate : 1.00%
New Interest Rate : 0.35%!

I been planning to transfer my Skipton LISA for a while,  but was never keen on switching to app only access like Moneybox.
I  also live close to a local branch of Skipton B.S, so made it a lot easier if I needed to speak to anyone!
Will probely look at Nottingham B.S, as it matches the Moneybox rate (1.25%)
My concern is I begin the transfer, from Skipton B.S to Nottingham B.S  then they also decide to drop the rate!