Help to Buy ISA - Mistake/Help!

Tig2505

Hello,

I'm hoping for a bit of advice/help with what I think is a stupid, but big mistake I have made when saving with my Cash ISA's. This is a new account/first post but I've been browsing a while and have seen the amazing help people have received from others on here and am hoping for a bit myself!

It's a bit complicated but basically I think I have (stupidly) voided myself of the 25% Help to Buy bonus and I'm wondering if anything can be done to fix it or if I should just give up.

I currently have a Help to Buy Cash ISA with Natwest opened in Feb 2017. I have been paying the maximum amount in each month whilst also paying into a savings account also with Natwest. I thought everything was fine and above board until today I read something which I obviously missed the first time I looked into opening an account - that you're not allowed to pay into both a Cash ISA and a Help to Buy ISA in the same year.

Unfortunately for me I had a Post Office Online ISA that I opened the previous tax year in Jan 2016. But I made a couple of payments in the Sep/Oct 2016. This means that when I opened my Help to Buy ISA in Feb 2017 I had already paid into a Cash Isa that year and so from what I have read I should have transferred they money across and then shut down that Cash ISA. Which I didn't do.

I'm certain this means that I will lose out on the 25% bonus from the government. However I know there are the new LISA's that have just opened up. I'm hoping that all may not be lost and that if I open up a LISA and transfer in the money from my Help to Buy into that I would still be able to claim the 25% bonus on that, if I make sure I do not pay into any other cash ISA's!

Is this something that is possible or do I just have to come to terms with the fact I have by my own fault lost the 25% bonus? Any help or advice is greatly appreciated to help me from pulling out all of my hair in frustration! :mad: :mad:

isasmurf

You should wait for HMRC to contact you later this year. All may not be lost. There are rules in place that allow deposits to an invalid number of ISAs to be kept provided the total deposits across all ISAs are not more than the annual allowance. If this happens then any interest received on last year's deposits to the invalid ISA will count towards your personal savings allowance up to the date HMRC notify NatWest to start applying the ISA tax exemption. This is a process known as repairing.

The HTB scheme rules allow you to remain entitled to the bonus if the ISA is repaired.

Tig2505

Thank you Isasmurf, I guess I will just have to wait and see. I did contact HMRC today but the woman I spoke to (after speaking to a colleague) advised me to contact my bank instead which I then did who were also not much help!

My partner and I are not looking to buy until Summer of next year anyway and so I was already thinking of opening a LISA and doing what many others will be - transferring my Help to Buy ISA into it in March 2018. I was hoping as I will have opened the LISA in a new tax year and only paid into this account my help to buy ISA and my Natwest Savings Builder Account that it may be okay and I would be able to receive the bonus through the LISA.

Wacemindu

I'm not claiming to be any kind of expert at all, though just be careful changing across to the LISA. Currently I think it is only investment institutions that offer them as Stocks and Shares ISAs (with the exception of one cash LISA at 0.5% interest!) , so make sure that the platform fees and risk of lower interest rates with an investment platform are better than the interest you can get on a help to buy ISA which I think is 2.00%, rubbish but not bad for a cash investment by comparrison.

Also!! If you're looking to buy next summer, be aware you can only withdraw your LISA funding after the account has been open 12 months. So you may inadvertantly delay when you can buy.
I also beleive the bonus is paid annually as opposed to when the account is closed, putting further constraints on when you buy.

There's an MSE blog about it, ( I cant post links in here yet apparently)

I find the terms between the two quite confusing!

greenglide

I also beleive the bonus is paid annually as opposed to when the account is closed, putting further constraints on when you buy.

The bonus on 2017-2018 contributions is paid after April 2018 but all future bonuses (for contributions from April 2018 onwards) will be paid in the following month.

Tig2505

Greenglide, that was my understanding too with the LISA. My plan was to keep paying into my Help to Buy ISA with the 2% interest and open the Skipton LISA and then pay across prior to the end of the tax year in March 2018. As I'm also not looking to buy until probably after June '18 I should be okay if I open the LISA now.

I think my best bet is to wait and hear from HMRC but hopefully opening the LISA and being more careful where I pay my savings I will be able to claim the bonus on that!

greenglide

At least the LISA is a different form of ISA so wouldnt affected irrespective of the situation with the cash ISA problems.

You need to open the LISA now (Skipton is the only choice) and put a minimum in as you cant withdraw using the bonus until the account has been open for a year.

Tig2505

That's what I'm hoping greenglide! I think I'm lucky that the LISA has opened at seemingly the right time for me