Transferring Help To Buy to Lifetime ISA

dodomoney

Hi I've got a Help to Buy with approx £9,000 in it. I've been considering switching it to a Lifetime ISA but always been put off by the 1 year minimum time I'd have to lock it in for (as I may decide to buy my first home within this year). I have found an old article by Martin Lewis advising to open a Lifetime ISA and just put £1 in it. Keep the money in the help to buy until the Lifetime ISA approaches its first year end, then transfer the Help to Buy funds to Lifetime. This seems like a good idea, so my first question is does this method still work? Or has there been any kind of measures put in place to stop people putting the £1 in?

Secondly, my Help to Buy ISA is with Nationwide, and it allows me to also deposit monies in to another Nationwide ISA so I can use up my full 20k allowance every year (I think its called a split-ISA or something). Is there a similar product for the Lifetime ISA? i.e deposit the £4k annually in to the Lifetime ISA and then allowed to deposit another 16k in to another ISA product with that same provider?

Lastly, as we're in a new financial year now, I have not yet deposited my monthly £200 in to my Help to buy. I've held off depositing this month just in case it will affect me from depositing in to the Lifetime ISA. Am I ok to go ahead and desposit in to the help to buy?

Thanks

Alexland

1) You are fine to open a LISA with a provider that accepts a £1 opening balance to start the 12 month clock however the problem you will find is that it was only in the first tax year LISAs were launched that you could transfer the entire HTB ISA balance across. You are now limited to the £4k annual LISA limit for new contributions or transfers.

2) Yes, nationwide allow you to contribute to multiple Cash ISA accounts (Inc a HTB ISA) in the same tax year and they report it to HMRC under a single Split Cash ISA. However a LISA (in cash or s&s) is a fundamentally different type of ISA so you are fine to contribute to a LISA and still add to other ISA types with different providers subject to the overall £20k annual contribution limit.

3) Sure you are fine to contribute to the HTB ISA this tax year (see above logic). As you have already saved £9k in the account the only reason I can see for starting again with a LISA is if the property is likely to be priced between £250k and £450k outside London.

Alex

20SmthngSver

I'd open a Lifetime ISA with £1 and then transfer £3999k into it from your HTB ISA, as you'll get £1k bonus added to it this tax year, meaning you can still fund your Help to Buy ISA and increase that still, as well as maintaining your Cash ISA split as that's what Nationwide offer.


£1k bonus is worth doing this for, as you'll be better off without really have to do anything.

Alexland

Yes but remember the OP can only either claim the HTB ISA bonus or make a penalty free LISA withdrawal towards a qualifying property purchase - not both. It would take many tax years before they could contribute more into a new LISA than they could have contributed into their existing HTB ISA.

dodomoney

Thanks, I hope the above is all correct as I get this message when I deposit my first £200 for this years Help to Buy
"Warning
If you confirm, your money will be transferred. Your transfer will normally be credited immediately.

Please read the following important information first as it may affect your investment.

Thank you for choosing to save in a Nationwide cash ISA*. The tax year runs from 6 April to 5 April the following year. If you make or have made a subscription into your Nationwide cash ISA during the current tax year, you cannot subscribe to another cash ISA with another provider until the start of the new tax year.

*The Nationwide cash ISA can be comprised of any of the cash ISA products provided by Nationwide.

Confirm that you want to continue."

dodomoney

Alexland wrote: »

1) . You are now limited to the £4k annual LISA limit for new contributions or transfers.

Alex

Thanks for clarifying. In that case it wouldn't really be worth me transferring my 9k over to a LISA would it as I'd only be able to transfer £4k each year. So even over two years I'd only have 8k in the LISA and then the remainder would be sat in my help to buy, being of no real use to me. I'd have to wait 3 to 4 years just to get all my help to buy balance accross to the LISA - which is not useful as I'll have bought the house by then.

Its annoying how rigid these schemes are. They just seem to be full of arbitrary rules. It wouldn't seem so unfair if both these ISAs were available to me from the beginning, but I was kind of sold a bit of a bum deal on the help to buy, then they bring out the LISA which is so much more advantageous but Im basically bound to sticking with the help to buy which is an inferior product :mad:

Alexland

The nationwide message is correct as a LISA is not a Cash ISA see the overview at:
https://www.gov.uk/individual-savings-accounts

The government did see that people like yourself would want to move your full HTB ISA balance into a LISA which is why they made this possible for the first LISA tax year 2017/18 although not all LISA providers were able to implement the technology to enable these HTB ISA transfers most notably Nutmeg who just gave up.

Alex

dodomoney

Alexland wrote: »

The nationwide message is correct as a LISA is not a Cash ISA see the overview at:
https://www.gov.uk/individual-savings-accounts

The government did see that people like yourself would want to move your full HTB ISA balance into a LISA which is why they made this possible for the first LISA tax year 2017/18 although not all LISA providers were able to implement the technology to enable these HTB ISA transfers most notably Nutmeg who just gave up.

Alex

thanks. I appreciate they made it possible for the first year to transfer but unless you went searching for the information then I wasn't to know. They should keep it open to transfer for anybody with a help to buy that pre-dates the introduction of LISA. It just seems like rules for the sake of rules. Its the same with the one year rule on the LISA. Make it six months at the most. A year is far too onerous. The scheme was supposed to encourage first time buyers - yet locking them in for their first year will have put loads of people off from buying when opportunities have come up.

Alexland

dodomoney wrote: »

thanks. I appreciate they made it possible for the first year to transfer but unless you went searching for the information then I wasn't to know. They should keep it open to transfer for anybody with a help to buy that pre-dates the introduction of LISA. It just seems like rules for the sake of rules. Its the same with the one year rule on the LISA. Make it six months at the most. A year is far too onerous. The scheme was supposed to encourage first time buyers - yet locking them in for their first year will have put loads of people off from buying when opportunities have come up.

As with most financial products unless you look for a better deal then you stay on the current deal. As with most detailed government policy these rules go through multiple reviews and comment resolution until an arrangement is agreed that satisfies all the stakeholder concerns.

The government need to keep a balance between ISA flexibility and the cost to ISA Managers and HMRC of maintaining transitionary arrangements.

Alex

20SmthngSver

I know, I was just suggesting accounts