Quick LISA/HTB question 27 February 2018 at 11:53PM in ISAs & tax-free savings 4 replies 713 views

Est.1882

Hi,

Wanted to get your expert opinion on what I should do with my LISA allowance.

Currently I have a HTB ISA with Halifax (~£6000 @3.5% AER) and a S&S LISA with Nutmeg (£100) open since April last year.

Originally I planned to shift my HTB, S&S LISA and remaining LISA allowance into the best paying Cash LISA around the end of March, but given the low interest rate of the Skipton and it being the only one out there I'm not sure what to do now.

Should I just lump the remaining LISA allowance into the Nutmeg account and wait until new tax year to think about anything else, or do I need to act to combine the HTB and LISA this tax year to avoid it counting against my LISA allowance in future?
And, if so, is the Nutmeg LISA a better bet than the low rate on the Skipton?

Wasn't expecting to have to think about this for a while, but now I see that the deadline for transferring to the Skipton is in just a couple of days! (And assuming I can open with a transfer online and haven't already left it too late...)

Thanks for any advice.

eskbanker

Est.1882 wrote: »

Currently I have a HTB ISA with Halifax (~£6000 @3.5% AER) and a S&S LISA with Nutmeg (£100) open since April last year.

Originally I planned to shift my HTB, S&S LISA and remaining LISA allowance into the best paying Cash LISA around the end of March, but given the low interest rate of the Skipton and it being the only one out there I'm not sure what to do now.

Should I just lump the remaining LISA allowance into the Nutmeg account and wait until new tax year to think about anything else, or do I need to act to combine the HTB and LISA this tax year to avoid it counting against my LISA allowance in future?
And, if so, is the Nutmeg LISA a better bet than the low rate on the Skipton?

If you want to transfer a sizable HTB balance into a LISA then it makes sense to do so this tax year, as this is the only opportunity to use the exemption that allows pre-2017/18 HTB contributions not to count towards the annual £4K LISA allowance. In other words, you can transfer your HTB into a LISA in future but you'd need to do so over multiple tax years if your HTB balance exceeds £4K.

However, you don't have too many options left anyway:

1. You can't transfer a HTB ISA into a Nutmeg LISA
2. You'd have to initiate any HTB transfer into an already-open Skipton LISA by tomorrow
3. You can't fund a Skipton LISA this year if you've already funded a Nutmeg one, unless you transfer Nutmeg to Skipton.

Est.1882

Thanks, confirms what I was thinking, but didn't consider that I couldn't transfer the HTB into Nutmeg.

I think my best bet is to open a Skipton sharpish and transfer Nutmeg and HTB into it.

One more question - on the eligibility page for the Skipton it says "You can only open one Lifetime ISA per tax year" - as I already opened the Nutmeg LISA will they reject my application or does it not matter as I will be transferring in the Nutmeg account?

eskbanker

You can open a second LISA in order to transfer in your first one so don't worry too much about that wording, but I'm not sure about the timing, i.e. paying in non-LISA money into Skipton before transferring the Nutmeg LISA in.

And given you've left it so late without even having opened the Skipton LISA yet, the day before the deadline, I'd suggest phoning them just to check that you can do what you have in mind, although I dare say their phones will be busy as the deadline approaches!

Est.1882

Thanks. I will give them a call and cross my fingers!