Help to Buy / Lifetime ISA query

DebtFreePlanning

Apologies if this is a silly question, but if the 'rules' regarding ISAs are changed at a later date, do we forfeit/lost any bonus that has accrued up until that date?


The reason I ask is that I am finally in a position to start putting money away into either a Help to Buy ISA or a Lifetime ISA. In the case of a Lifetime ISA, I am aware that the bonus is paid annually; however in the case of the Help to Buy ISA, if I was to start paying in now and let's just say Help to Buy ISA's were scrapped in 5 years, would I still be eligible to apply for the bonus as I had the ISA open during the qualifying timeframe? Or would I effectively lose any bonus entitlement?

isasmurf

Help to Buy ISAs will be available until November 2019. Contributions can continue until November 2029, with the bonus needed to be claimed by 1 December 2030.

There is never any guarantee a government won't seek to change the policy, but any change in policy will need to be approved by the Parliament of the day.

greenglide

In the case of a Lifetime ISA, I am aware that the bonus is paid annually;

No it isn't.

When April 2018 is reached the bonus for all contributions made the previous year are supposed to be paid and bonuses are to be paid monthly from then on.

Neil_Jones

Of course its entirely possible H2B vanishes entirely in the future (before 2029), it's entirely possible ISAs vanish entirely in the future. Unlikely but still a possibility. If it does happen there will usually be something that changes them to something else if the original product ceases to be available rather than just leaving them in limbo.

A good example is the old school Personal Equity Plans (or PEPs) introduced under the Thatcher government. They were ultimately replaced by ISAs and eventually any PEPs still floating around automatically became Stocks & Shares ISAs.

All of that being said, I don't think ISAs as a whole are going anywhere. The rules will be revised and the allowances will probably increase. What happens to H2B after November 2029 remains to be seen but if you're worried about losing the money if you still have H2B at that point, I wouldn't be too concerned about that.

Ed-1

Neil_Jones wrote: »

Of course its entirely possible H2B vanishes entirely in the future (before 2029), it's entirely possible ISAs vanish entirely in the future. Unlikely but still a possibility. If it does happen there will usually be something that changes them to something else if the original product ceases to be available rather than just leaving them in limbo.

A good example is the old school Personal Equity Plans (or PEPs) introduced under the Thatcher government. They were ultimately replaced by ISAs and eventually any PEPs still floating around automatically became Stocks & Shares ISAs.

All of that being said, I don't think ISAs as a whole are going anywhere. The rules will be revised and the allowances will probably increase. What happens to H2B after November 2029 remains to be seen but if you're worried about losing the money if you still have H2B at that point, I wouldn't be too concerned about that.

Help to Buy is scheduled to vanish in December 2019.

Neil_Jones

It will not "vanish". If you have one you can keep it for ten years after 2019.

https://www.helptobuy.gov.uk/help-to-buy-isa/faq/ wrote:

You’ll be able to open a Help to Buy: ISA until 30 November 2019. After that date they won’t be available to new savers anymore – but if you opened your Help to Buy: ISA before then you can keep saving into your account until 30 November 2029 when accounts will close to additional contributions. - See more at: https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#sthash.irE0rrr4.dpuf

Ed-1

Neil_Jones wrote: »

It will not "vanish". If you have one you can keep it for ten years after 2019.

Vanishes for new applicants. This also means if you have one post-2019 you're stuck with it and can't transfer to a different one which frankly, could also mean all providers slash the rate knowing you're stuck with it.

Eco_Miser

carefreeant wrote: »

Apologies if this is a silly question, but if the 'rules' regarding ISAs are changed at a later date, do we forfeit/lost any bonus that has accrued up until that date?

That would depend entirely on what the new rules said.

It would be a brave government that actually cancelled bonuses, or interest, retrospectively though.

Neil_Jones

Ed-1 wrote: »

Vanishes for new applicants. This also means if you have one post-2019 you're stuck with it and can't transfer to a different one which frankly, could also mean all providers slash the rate knowing you're stuck with it.

Doesn't mean that at all. Being able to pay into it and being stuck with it are two different things. One of the "benefits" of H2B is the ability to move it between providers like any other ISA, there has been no mention whatsoever that that will no longer be the case after 2019. It'll hopefully just be like just the Child Trust Fund - no longer available but you can switch those around between providers, not that there are many left now but that's not the point.

The devil will be in the detail in due course I suspect.

DebtFreePlanning

Thanks for all of the replies - much appreciated.

Ed-1

Neil_Jones wrote: »

Doesn't mean that at all. Being able to pay into it and being stuck with it are two different things. One of the "benefits" of H2B is the ability to move it between providers like any other ISA, there has been no mention whatsoever that that will no longer be the case after 2019. It'll hopefully just be like just the Child Trust Fund - no longer available but you can switch those around between providers, not that there are many left now but that's not the point.

The devil will be in the detail in due course I suspect.

The Government has said you will no longer be able to open Help to Buy ISAs from November 2019. Given you can only hold one Help to Buy ISA at any one time if you wanted to transfer you'd have to open a new Help to Buy ISA post-2019 which the Government has said you won't be able to do. However you can continue to pay into one already opened and claim the closing bonus until 2029.