Opened a H2B ISA in April 2016, planning on buying prob mid 2018 - LISA question?

dmo84

Hi all,

I am planning to buy a property sometime this year, maybe mid to end,

I have been saving in to a help to buy ISA account since April 2016.

I really should have opened a Lisa in April 2017 but didn't ! If I open one now and transfer my H2B ISA in to a lifetime ISA I'm going to have to wait a year before I can buy?

I completely missed this bit. I don't know why I didn't sign up

or, should I keep the current H2B ISA, and open up a LISA paying in lump sum and some monthly payments just in case it turns out I actually buy a house in Jan/Feb 2018? or am I too late?

Also I cant find a question on the weekend about minimum amount to open a lifetime ISA, Hargreaves Lansdown mention £100 opening. Is there anywhere that offers £1 opening until I know what I am doing?

Sorry and appreciate any advice

Kim_13

Yes that's correct, the LISA itself needs to have been open for a year before you can use it to buy a property.

Skipton (cash LISA) and Moneybox and The Share Centre (Stocks and shares) allow opening with £1.

Help to Buy ISA's can only be transferred into a Lisa in the current tax year. Skipton have set an earlier deadline of 1 March.

The MSE guide to Lifetime ISA's may be of interest: https://www.moneysavingexpert.com/savings/lifetime-ISAs

dmo84

Thanks. Is it worth opening with £1. And possibly moving some of my savings in to bonds to the lifetime ISA now? This way I still have my money in help to buy ISA and if I buy first half or mid or towards end of this year then I can use that. If I don't and i buy something say next Jan then I could use the bonus from the Lisa?

I'll read the link thanks

Alexland

I don't see any harm opening up a LISA for £1 now as the early withdrawal penalty would be pennies and it starts the clock and gives you options incase your property purchase is delayed.

In terms of moving more money in that's fine if you don't need it until 60 (in which case you would transfer from a cash to a s&s LISA) but if you are buying a house in the next 12 months using the HTB ISA there would be a LISA withdrawal penalty if the LISA money was also needed to complete the purchase.

eskbanker

Kim_13 wrote: »

Help to Buy ISA's can only be transferred into a Lisa in the current tax year. Skipton have set an earlier deadline of 1 March.

Not sure where this misconception has come from but it's not true that HTB ISAs can only be transferred into LISAs this tax year, I had to correct someone else claiming that within the last couple of days on here!

For anyone with HTB money predating this tax year and wishing to transfer this into a LISA without the pre-17/18 balance counting towards the 2017/18 £4K LISA allowance, this has to be done within this tax year (and initiated by 1 March if transferring to Skipton) but there's nothing stopping anyone transferring HTB to LISA any time after that....

Plus

As I pointed out in the other thread, post 5Apr2018 you can transfer HTB to LISA but you get no benefit from doing so. It becomes 'new LISA money' and hence is subject to the new year's contribution limits. It's just the same as withdrawing it in cash and then re-depositing it.

This is particularly a problem for those who have been saving since the beginning of HTB ISAs, who may have more than £4.5K in their HTB. That's more than one year's LISA allowance and so there's no way to transfer that in one year.

So, while you're technically correct, what's you're saying is misleading to many people.

(I'm unclear whether a 2018/19 HTB->LISA transfer counts against your £20K total ISA allowance, which would be a smidgen of a reason to transfer rather than via withdrawing cash. But I suspect many fewer people are worried about that limit)

eskbanker

I don't believe I'm being misleading, I'm just correcting a factual inaccuracy when people are erroneously making the false claim that transferring HTB to LISA isn't possible after this tax year!

Having said that, I do agree with you that it's unlikely to be in most people's interests to do so, but that's a separate discussion that does indeed need a more detailed analysis of individual savers' circumstances.

And such transfers in future years don't count towards the overall annual ISA allowance, as per the explanatory table at 9B.22 in the scheme rules, so it isn't the same as withdrawing in cash and redepositing....

dmo84

Thanks all. So I probably would be best doing it.

Can I just state here that my main aim is to see if there is a way I can maximise bonus for first property, ideally at exchange . Therefore if I whack a lump from my bonds in to the lifetime ISA and pay in to it monthly I have that as a backup.just incase something happens and I don't purchase this year. If I do purchase this year then I guess I would have to use the bonus from help to buy ISA