Lifetime ISAs guide

koru

amandaleeds wrote: »

So am I correct in thinking that if I were able to pay the full £4k in each year (very unlikely unless I get a huge payrise!) I get an extra £1000 added in from the government each year. So after 2 years I should have £10k in the account? For every year after my balance would go up by 5k (4k + 1k from the government)?

Yes, plus on top of that you would have the interest or investment returns that you earn, depending on how you invest the money. What Martin meant was that you get the 25% bonus upfront and then for as long as you leave the money in the LISA you also get the investment returns on it (which compound each year).

colsten

amandaleeds wrote: »

So am I correct in thinking that if I were able to pay the full £4k in each year (very unlikely unless I get a huge payrise!) I get an extra £1000 added in from the government each year. So after 2 years I should have £10k in the account? For every year after my balance would go up by 5k (4k + 1k from the government)?

Yes but don't forget the rest of the rules, and don't forget inflation.

If you are buying your first property, you can use your LISA money from 12 months after you took out the LISA. If you don't buy a property, you can pay in until you are 50, and you can take out your money penalty-free from age 60. In that case, you would have 10 years without government bonus and just bank interest rates. I am not saying it will not be worth your while - most likely it would be, if only because you are discouraged from spending your cash, and there's a reasonable chance your money will not lose value to inflation in the last ten years.

cglatot

Ed-1 wrote: »

The bonus is paid in a LISA regardless of whether you withdraw some to buy a house or not.

Where do you get this from? From what I have read, there is no clear statement of this, but I could just be missing something.

Ed-1

cglatot wrote: »

Where do you get this from? From what I have read, there is no clear statement of this, but I could just be missing something.

Look at Chart 1A.

You can use some of the LISA savings to buy a house and continue saving for retirement.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508176/Lifetime_ISA_final.pdf

cglatot

Ed-1 wrote: »

Look at Chart 1A.

You can use some of the LISA savings to buy a house and continue saving for retirement.

...... I have no idea how I didn't catch that this morning. Thanks for pointing it out! Definitely makes it a clear option (for me) to move the HTB ISA money into a LISA next year then!

Vanthel

So say I transfer my H2B ISA into the LISA when it comes out, are we thinking that the H2B bonus will be added to the bonus at the end of the first year, so the balance end of year 1 of the LISA would be:

H2B ISA Contributions + H2B Bonus + LISA Contributions + LISA Bonus
= a potential (£4,200 + £4,000) * 1.25 = £10,250 + interest by April 2018?

colsten

You won't get the HTB ISA bonus. It's all explained here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508176/Lifetime_ISA_final.pdf

frankmassiebonsai

Section 1.16 of the lifetime ISA guide seems to me to say that you will get the annual government bonus on any help to buy ISA funds transferred into a lifetime ISA (during it's first year only).

colsten

frankmassiebonsai wrote: »

Section 1.16 of the lifetime ISA guide seems to me to say that you will get the annual government bonus on any help to buy ISA funds transferred into a lifetime ISA (during it's first year only).

The "annual government bonus" is not the same as the HTB ISA bonus.

Vanthel

I would agree that paragraph 1.16 states you do not lose the H2B bonus, provided you transfer within the 2017-18 tax year:

1.16 During the 2017-18 tax year only, those who already have a Help to Buy: ISA will be able to transfer these funds into a Lifetime ISA and receive the government bonus on those savings.
Any Help to Buy: ISA funds that were saved prior to the introduction of the Lifetime ISA on 6
April 2017 will not count towards the Lifetime ISA annual contribution limit. Contributions
made after this point to the Help to Buy: ISA and transferred across will count against the
annual contribution limit. At the end of the tax year they will receive a bonus on the full amount
of the transferred Help to Buy: ISA and their Lifetime ISA contributions. In line with the normal
Lifetime ISA rules, Help to Buy: ISA savers will be able to purchase a first home with the
government bonus 12 months from the date of opening their Lifetime ISA.

The contribution limit mentioned is the £4k a year limit on the LISA, and the H2B not contributing to meeting this limit is a good thing. So if you have an H2B ISA now, and transfer it in when opening the LISA, you should get a more than usual bonus at the end of that first year.