Lifetime ISAs guide

Nomad_Nicol

grumiofoundation said:

Nomad_Nicol said:

Hello,
Apologies, I'm sure this has been answered many times through the course of this thread and others but there's an awful lot out there and the ones I found in my searches were quite dated.
I'm hoping to buy my first home in around 6-9 months and was a bit late to the party with LISAs.  From reading the guide it does seem that it's still worth my while to open an account, make the minimum deposit and then use the LISA if I've still not bought a home within a year.
Am I right in thinking I'll still be awarded the £1000 bonus if I leave this account for 11 months and then transfer in £3990 to go on top of my £10 initial deposit next June?
Is there any reason that I should do this?
Thanks  

The £4000 contribution limit is per tax year not per calendar year. So if you open with £10 today you have until April 2021 to pay in your £3990. Then it resets - meaning the limit is £4000 in tax year 2021/2022.

so by this time next year you will have been able to contribute £8000. 

It makes sense to open a LISA with a small amount today - there’s no downside. 

Ah, thanks for explaining.  That's interesting as it's around April that I'd hope to buy so I'll be in a great place to know then if it's worth doing.  I'll set a reminder that I'd want to put that in before the end of the tax year and then I could do so again with another £4k.

Brilliant, thanks  

grumiofoundation

Nomad_Nicol said:

grumiofoundation said:

Nomad_Nicol said:

Hello,
Apologies, I'm sure this has been answered many times through the course of this thread and others but there's an awful lot out there and the ones I found in my searches were quite dated.
I'm hoping to buy my first home in around 6-9 months and was a bit late to the party with LISAs.  From reading the guide it does seem that it's still worth my while to open an account, make the minimum deposit and then use the LISA if I've still not bought a home within a year.
Am I right in thinking I'll still be awarded the £1000 bonus if I leave this account for 11 months and then transfer in £3990 to go on top of my £10 initial deposit next June?
Is there any reason that I should do this?
Thanks  

The £4000 contribution limit is per tax year not per calendar year. So if you open with £10 today you have until April 2021 to pay in your £3990. Then it resets - meaning the limit is £4000 in tax year 2021/2022.

so by this time next year you will have been able to contribute £8000. 

It makes sense to open a LISA with a small amount today - there’s no downside. 

Ah, thanks for explaining.  That's interesting as it's around April that I'd hope to buy so I'll be in a great place to know then if it's worth doing.  I'll set a reminder that I'd want to put that in before the end of the tax year and then I could do so again with another £4k.

Brilliant, thanks  

The LISA has to have been open for 12 months before you can use it - so if you open today you wont be able to use until next July.

Miss_3

Hi, is there a limit on how long you can hold one of these.  I'm assuming that at some point my 18 year old will want to by a house/flat so could he open a LISA now and just keep paying into it until he needed it, maybe in 8 years for example?

eskbanker

Miss_3 said:

Hi, is there a limit on how long you can hold one of these.  I'm assuming that at some point my 18 year old will want to by a house/flat so could he open a LISA now and just keep paying into it until he needed it, maybe in 8 years for example?

The bad news is yes, there is a limit.

The good news is that they can be kept open until the holder is 60, so it seems unlikely that your 18 year old will find that problematic!

P1Fanatic

No limit but you can only pay in £4k every tax year up until your 40th birthday. If your son Doesn't need the money for 8yrs then I would seriously look at a Stocks & Shares LISA. There is the risk it could go down but over that timeframe you would be very unlucky. Ive paid the full amount into one the last 4yrs so £16k of my own money, govt bonus £4k and my LISA is sat at £24,400 today (so £4.4k increase over and above the bonus). And I am no savvy investor - just pick a few different funds to spread the risk.

Ghostcrawler

No thats not right, you can open LISA until your 40th birthday but you can keep paying £4k until your 50th birthday. Until then you can also make changes to your plan. If withdrawing before age 60 then 25% will be deducted from withdrawal amt. Withdrawal is not until age 60 or incase of death or terminal illness.  After age 50 it remains invested, but not allowed to add any new money/deposit

P1Fanatic

Ghostcrawler said:

No thats not right, you can open LISA until your 40th birthday but you can keep paying £4k until your 50th birthday. Until then you can also make changes to your plan. If withdrawing before age 60 then 25% will be deducted from withdrawal amt. Withdrawal is not until age 60 or incase of death or terminal illness.  After age 50 it remains invested, but not allowed to add any new money/deposit

Apologies you are correct and I should know that as I turned 40 the year they started LISAs and literally got in with a few days to spare (unlike my wife who missed it by a few months).

mrsbee11

Sorry if this has already been asked. My son who is a student has a help to buy ISA with almost the £12000 limit for the bonus invested. He is unlikely to be in a position to buy his first property in the next 3 years and realistically not buying below £250000. Would he be better off to move the money at £4000 per year into a LISA and can you withdraw from a HTBISA into your normal account and then reinvest it as cash into a LISA if the LISA BS does not accept transfers from HTB ISAs?

Thank you

grumiofoundation

mrsbee11 said:

Sorry if this has already been asked. My son who is a student has a help to buy ISA with almost the £12000 limit for the bonus invested. He is unlikely to be in a position to buy his first property in the next 3 years and realistically not buying below £250000. Would he be better off to move the money at £4000 per year into a LISA and can you withdraw from a HTBISA into your normal account yes and then reinvest it as cash into a LISA if the LISA BS does not accept transfers from HTB ISAs  Pro Bowl, Best OL?

Thank you

If will not buy below 250000 then yes makes sense open and fund LISA (assuming will definitely want to buy in UK, and will not need access to cash as in this case would have to pay penalty).

Yes can withdraw from HTB with no penalty.

Yes can then contribute to LISA (assuming has 4000 ISA allowance left).

bradleyaidanjohnson

Transferring from HTB ISA to SnS ISA

I posted this in a separate thread but maybe it belongs here? Not sure:

I want to transfer my help to buy ISA to a new EQi Stocks and Shares LISA. And want to do it in the most efficient way. I’ll give the facts:

No current plans to buy soon

Currently £4,484.30 in the HTB ISA

Before the 2020/21 tax year began there was £3863.22 saved in the HTB ISA

I have contributed £600 to the HTB ISA so far this tax year

I have contributed £17,600 into a vanguard stocks and shares ISA this year (the plan previously being to contribute the max £2,400 per year into the HTB ISA to hit the £20,000 cap for the year)

I have a standing order to continue contributing £200 per month into the HTB ISA (which of course I can cancel at any time)

I have more than enough available cash reserves now to immediately hit the entire 2021/22 ISA cap again in April 2021 and intended to do so maximising the £20,000 ISA cap (£16,000 stocks and shares ISA, £4,000 new LISA) and continuing in that fashion for the foreseeable future. 

The question I have is simply: what is the most efficient way to make what will likely be multiple transfers into the new LISA? The government info is not very detailed and I’ve found some conflicting information. Namely:

“ You can transfer your Individual Savings Account (ISA) from one provider to another at any time.

You can transfer your savings to a different type of ISA or to the same type of ISA.

If you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it.

For money you invested in previous years, you can choose to transfer all or part of your savings.” -gov.uk

This makes it sound to me that I can only transfer £3863.22 to the LISA in 2020/21 and would need to invest the remainder in cash. Then I could transfer the remaining cash in the account in 2021/22. Is this correct?

Would an efficient plan be to transfer the £3863.22 immediately and top up with cash (£136.78). Then continue contributing £200 per month into the HTB ISA (with a final £63.22 payment April 1). Come 2021 April 6th there would be £5,000(+- market movement) In the LISA and £2300 ish (£621.08 remaining from the transfer + £1,663.22 of monthly deposits + 2% interest: £20 give or take) in the HTB ISA. 

Could I transfer the remaining £2300ish to the LISA and top up with cash (£1700 ish) to then have a remaining ISA allowance for 2021/22 of £18,300 ish and having had received the £2,000 of LISA bonus fro both years?

Am I missing something with this calculation? Is there a better way? Am I breaking any rules? Not trying to cheat. Just use the systems as they are laid out. Sorry for the long post but it’s a fairly detailed question! Thanks in advance