Help to Buy & LISA's

madeinireland_2

A couple of questions on this topic if I may that I am asking on behalf of my daughter...

I understand the principle of using the help to buy ISA and Lisa together.

1. If I was planning to buy a house in May/ June 2018 and has say a total of £8000 for arguement sake in the LISA at April 2018 I understand I would effectively have £2000 added so that the total was now £10000. Can I then immediately add £4000 to the LISA causing a further £1000 contribution from the state meaning I now have £15000 to buy a house?

2. If I kick off a LISA now and then go off to Australia on a 12 month working holiday would I still be able to carry out the plan above? I understand that you have to be in the UK to start one and contribute to one but how would anyone know so long as the contributions were made and I left the money or sent the money to parents for them to pay in - Would I be able to just return and continue the plan?

Thanks...

madeinireland_2

Does anyone know then or are the rules not clear yet?

lotti_bosman

I am also keen to know the answer to these questions. Also on a similar theme, am I right in assuming that I could deposit £4000 into a LISA in, say, March 2018 and still be eligible for the government 25% bonus (£1000) at the end of the 2017/2018 tax year? I haven't read anything to say that this isn't permissible other than "if an individual has made contributions of £4,000 into their lifetime ISA by 5 April 2018, the government bonus will be £1,000."

masonic

lotti_bosman wrote: »

I am also keen to know the answer to these questions. Also on a similar theme, am I right in assuming that I could deposit £4000 into a LISA in, say, March 2018 and still be eligible for the government 25% bonus (£1000) at the end of the 2017/2018 tax year? I haven't read anything to say that this isn't permissible other than "if an individual has made contributions of £4,000 into their lifetime ISA by 5 April 2018, the government bonus will be £1,000."

That quote seems pretty clear doesn't it? I couldn't put it any better myself.

MJD

A lot of the previous has sort of been covered but I am just wondering:

With no plans to buy a house in the next 12 months

HTB ISA will have £3400 in it by April 2017 and currently pays quite a nice interest rate.

Take out a LISA in April 2017 with the full £4000

What I am wondering is whether it will be worth continuing to pay into the HTB?

I think I picked up on the HTB being a Cash ISA and the LISA not which means that in the tax year 2017/18 I could pay into both (The £4000 into the LISA and £2400 in installments into the HTB) Then before the end of the tax year I can transfer the £3400 invested in the HTB into the LISA and will receive the bonus on this which will leave (will I be able to make a partial transfer)the HTB with a balance of £2400 which will not 'fit' into the LISA but will have earned a high rate of ISA interest (assuming that the interest rates on HTBs do not plummet to encourage people toward LISAs)

Ed-1

MJD wrote: »

A lot of the previous has sort of been covered but I am just wondering:

With no plans to buy a house in the next 12 months

HTB ISA will have £3400 in it by April 2017 and currently pays quite a nice interest rate.

Take out a LISA in April 2017 with the full £4000

What I am wondering is whether it will be worth continuing to pay into the HTB?

I think I picked up on the HTB being a Cash ISA and the LISA not which means that in the tax year 2017/18 I could pay into both (The £4000 into the LISA and £2400 in installments into the HTB) Then before the end of the tax year I can transfer the £3400 invested in the HTB into the LISA and will receive the bonus on this which will leave (will I be able to make a partial transfer)the HTB with a balance of £2400 which will not 'fit' into the LISA but will have earned a high rate of ISA interest (assuming that the interest rates on HTBs do not plummet to encourage people toward LISAs)

Yes, you should be able to do a partial transfer as long as the ISA transfer form allows you to select previous tax year contributions only.

If the H2B ISA interest rate is bigger than the LISA interest rate then it makes sense to pay into the H2B ISA for as long as possible.

Katie_A

I have read the various articles on the new Lifetime ISA and the scenarios of if/when to move your HTB ISA into a Lifetime ISA.

The one point I was unsure of is why MSE recommends keeping the HTB ISA until March 2018 – having put £2,400 over 12 months – and only then transferring it LISA and topping it up with £1,600 before the end of the tax year. Why is this better than transferring the HTB to LISA in April 2017 and putting the £4,000 in then? The amount that will be in the LISA at the end of the 2017-2018 tax year will be the same.

Thanks.

masonic

Katie_A wrote: »

The one point I was unsure of is why MSE recommends keeping the HTB ISA until March 2018 – having put £2,400 over 12 months – and only then transferring it LISA and topping it up with £1,600 before the end of the tax year. Why is this better than transferring the HTB to LISA in April 2017 and putting the £4,000 in then? The amount that will be in the LISA at the end of the 2017-2018 tax year will be the same.

It maximises your flexibility (and probably your interest). Although you should really open a LISA with a minimum deposit as early as possible to give yourself the option of using the LISA for a house purchase.

darkidoe

Katie_A wrote: »

I have read the various articles on the new Lifetime ISA and the scenarios of if/when to move your HTB ISA into a Lifetime ISA.

The one point I was unsure of is why MSE recommends keeping the HTB ISA until March 2018 – having put £2,400 over 12 months – and only then transferring it LISA and topping it up with £1,600 before the end of the tax year. Why is this better than transferring the HTB to LISA in April 2017 and putting the £4,000 in then? The amount that will be in the LISA at the end of the 2017-2018 tax year will be the same.

Thanks.

That is in the case where you may be buying before April 2018 and you need to get access the HTB bonus before then. LISA bonus only comes at the end of the tax year, hence the earliest LISA bonus would be April 2018, which wouldn't be of much use prior to April 2018. If you are confident you will not be buying before then, then by all means go ahead to get the LISA.