Lifetime ISAs guide

mourning

Hi Everyone,

So I've got a Help2Buy ISA which I opened in Feb 2016. I have approximately £2000 in there at the moment. Interest is currently 3.5% paid annually (Appears to be each February looking at my statement)

I've now opened a Lifetime ISA with Skipton Building Society and I'm looking to transfer my Help2Buy ISA into it.

Can I transfer my Help2Buy ISA into my lifetime ISA after February so I can still claim my Help2Buy interest? Or do I need to transfer the Help2Buy ISA within a certain time frame?

Thanks in advance :money:

Chippy95

So I currently have £4670 in a HTB ISA with Santander (4% IR) and was thinking about transferring it into a LISA. My interest is paid on the 2nd of March. Should I continue paying £200 a month into my HTB ISA, then once I receive my interest on the 2nd of March transfer it all into a LISA?

Cheers
Matt

mourning

Chippy95 wrote: »

So I currently have £4670 in a HTB ISA with Santander (4% IR) and was thinking about transferring it into a LISA. My interest is paid on the 2nd of March. Should I continue paying £200 a month into my HTB ISA, then once I receive my interest on the 2nd of March transfer it all into a LISA?

Cheers
Matt

Same situation as me, looking for same advice

eskbanker

mourning wrote: »

Hi Everyone,

So I've got a Help2Buy ISA which I opened in Feb 2016. I have approximately £2000 in there at the moment. Interest is currently 3.5% paid annually (Appears to be each February looking at my statement)

I've now opened a Lifetime ISA with Skipton Building Society and I'm looking to transfer my Help2Buy ISA into it.

Can I transfer my Help2Buy ISA into my lifetime ISA after February so I can still claim my Help2Buy interest? Or do I need to transfer the Help2Buy ISA within a certain time frame?

Thanks in advance :money:

You'll receive pro rata interest up to the date of transfer whenever that is, so don't need to take into account the scheduled interest payment date when deciding.

You can transfer your HTB to LISA at any time - there is a one-off concession during 2017/18 that allows HTB money from prior years to be transferred into LISA without affecting the annual allowance of £4K, but that's more useful for those with larger balances than £2K.

So, how much would you anticipate having saved by the end of 2017/18 and 2018/19? It may be to your advantage to keep the money in the HTB anyway if you wouldn't be in a position to use the higher annual allowance available in the LISA, as you'd earn more interest that way, although the property value limit is lower for HTB....

eskbanker

Chippy95 wrote: »

So I currently have £4670 in a HTB ISA with Santander (4% IR) and was thinking about transferring it into a LISA. My interest is paid on the 2nd of March. Should I continue paying £200 a month into my HTB ISA, then once I receive my interest on the 2nd of March transfer it all into a LISA?

Cheers
Matt

Right answer but wrong reason - as above, interest will be paid pro rata whenever you transfer so you don't need to plan the transfer around the scheduled interest payment date.

Having said that, it's probably sensible to transfer in early/mid March anyway as you need to complete the transfer by 5 April in order to benefit from the one-off HTB/LISA transfer concession this tax year and it takes up to 15 working days (and will obviously be a busy time).

Or, to answer your question more succinctly, yes!

mourning

Hi Eskbanker,

Thanks for getting back to me and all your advice. So there are 2 main reasons I was going to transfer to the LISA.

1) Because I was under the impression that H2B ISAs only contribute as a mortgage deposit rather than a home deposit (have I got that wrong?)

2) After April, the bonus is then accrued monthly, meaning I'd effectively be earning a bonus on my bonus. As after the monthly bonus is paid, it counts in the next months bonus calculations too?

eskbanker wrote: »

You'll receive pro rata interest up to the date of transfer whenever that is, so don't need to take into account the scheduled interest payment date when deciding.

You can transfer your HTB to LISA at any time - there is a one-off concession during 2017/18 that allows HTB money from prior years to be transferred into LISA without affecting the annual allowance of £4K, but that's more useful for those with larger balances than £2K.

So, how much would you anticipate having saved by the end of 2017/18 and 2018/19? It may be to your advantage to keep the money in the HTB anyway if you wouldn't be in a position to use the higher annual allowance available in the LISA, as you'd earn more interest that way, although the property value limit is lower for HTB....

eskbanker

mourning wrote: »

1) Because I was under the impression that H2B ISAs only contribute as a mortgage deposit rather than a home deposit (have I got that wrong?)

Sort of - the HTB ISA bonus itself is only available at completion but the rest of the pot can be used for the earlier deposit, as per https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#can-i-use-for-deposit

mourning wrote: »

2) After April, the bonus is then accrued monthly, meaning I'd effectively be earning a bonus on my bonus. As after the monthly bonus is paid, it counts in the next months bonus calculations too?

No, the LISA bonus is paid on contributions not balance, so you can't earn bonus on bonus in the way you seem to be suggesting. You'll earn interest on the bonus but that's obviously a much smaller percentage!

luath

Hello. I have just £2400 saved in a HTB which started this this tax year. Is it correct that if I transfer this to a newly opened Skipton Lifetime ISA the transferred amount counys towards the £4000 limit. So whenever I transfer the maximum bonus is only £1000?

Alexland

Welcome to the forum,

Yes your transferred HTB contributions and any interest earned so far will count towards your £4000 LISA limit. So the maximum bonus you can receive in relation to this tax year for the purchase of a property is £1000 which will be paid into the LISA account in April or May 2018.

Alex

Lolly88

Ed-1 wrote: »

At least it shouldn't by law. Whether it will in practice is another matter...

Exactly. The information I quoted was directly from their current terms and conditions on the ISA transfer page so if they haven't even updated their terms then it doesn't inspire confidence that they will do this in practice. But rather than speculating it is better just to contact Skipton direct and ask them.