ISA situation: LISA instead of HTB? 11 May 2019 at 3:50PM edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings 3 replies 629 views

pioruns

Hello,
Friend of mine (not Fin-savvy) has decided to start saving for a house, this is her current situation:

Cash ISA opened years ago, saving there every year, including this tax year
I went with her to her bank to open HTB, successfully opened, however, she can't start saving on it, because already subscribed to Cash ISA this tax year. To keep HTB open (bank asks for mandatory first deposit), her current tax year ISA contributions have been transferred to HTB. This amount will remain there until next tax year, from there she can start depositing monthly into HTB instead of Cash ISA.

Question:

Can she close HTB and open LISA instead, in different bank (as her bank doesn't offer those)?
LISA have different monthly limits and is being treated as separate ISA-entity (not Cash ISA), therefore should not be a problem to open one now and deposit into it? And save until she have enough for a mortgage deposit and will get +25%, just like on HTB?

EDIT: Another problem, just found out about it: Her bank's online portal now allows her to deposit any amount into HTB, and Cash ISA is blocked:eek: She made a mistake and deposited 300 GBP into it :(She will see them at the branch in a few days, but question comes to mind, is this their glitch, or her HTB is now "live" and allowed to deposit instead of to Cash ISA, because she transferred current tax year contributions (in full) to HTB? If that's the case, then this was smart move from the bank, I have to admit, to do it this way, she can ditch Cash ISA start depositing into HTB. However, I am still not sure about this hence the ask for help here.


I appreciate any replies, thanks. :beer::j

xylophone

https://www.moneysavingexpert.com/savings/lifetime-isas/

may help.

masonic

pioruns wrote: »

Hello,
Friend of mine (not Fin-savvy) has decided to start saving for a house, this is her current situation:

Cash ISA opened years ago, saving there every year, including this tax year
I went with her to her bank to open HTB, successfully opened, however, she can't start saving on it, because already subscribed to Cash ISA this tax year. To keep HTB open (bank asks for mandatory first deposit), her current tax year ISA contributions have been transferred to HTB. This amount will remain there until next tax year, from there she can start depositing monthly into HTB instead of Cash ISA.

Presumably her current tax year cash ISA contributions were less than £1200. Otherwise this would have breached the £1200 limit for the first month's contribution.

Question:
Can she close HTB and open LISA instead, in different bank (as her bank doesn't offer those)? LISA have different monthly limits and is being treated as separate ISA-entity (not Cash ISA), therefore should not be a problem to open one now and deposit into it?

Yes, she can do this. There is no monthly limit for a LISA, but there is an annual limit of £4000.

And save until she have enough for a mortgage deposit and will get +25%, just like on HTB?

Yes, but the rules and process are slightly different.

EDIT: Another problem, just found out about it: Her bank's online portal now allows her to deposit any amount into HTB, and Cash ISA is blocked:eek: She made a mistake and deposited 300 GBP into it :(She will see them at the branch in a few days, but question comes to mind, is this their glitch, or her HTB is now "live" and allowed to deposit instead of to Cash ISA, because she transferred current tax year contributions (in full) to HTB?

Assuming she is still in the first month of holding the HTB ISA, and the amount transferred from the cash ISA was less than £900, then this may be acceptable - as long as the provider allows multiple deposits per month. Otherwise the money will probably be removed from the HTB ISA in due course.

pioruns

Hi all,


Went to the bank again and mistery is now solved. Person at the bank didn't knew what she was doing apparently That HTB ISA is now active for this tax year, this has been confirmed during my second visit. Cash ISA is now closed, money taken care of, HTB initial deposit topped up to maximum allowed 1k, standing order set. My friend is happy.
Thanks everyone for your replies.:beer: