Paying into a LISA and H2B isa

jcat12

Hello everyone!:j

I own a LISA and would like to open a Help 2 Buy ISA too.

I would like to use my LISA for retirement and my H2B ISA toward a property. This seems like a smart way of gaining as much free money from the government as possible!

I'm trying to find out if I am allowed to pay into a H2B and a LISA in the same tax year?? Is this allowed?

eskbanker

Yes, you are allowed to pay into both concurrently.

jcat12

This is the answer I was hoping for, but I've just looked over the FAQs on the government H2B website and they state that you cannot pay into a cash ISA and the H2B ISA. This is confusing me because I have a cash LISA, not a stocks & shares LISA - so i'm not sure if they class this as as being a cash ISA.

This is proving more complicated than I thought.

eskbanker

jcat12 wrote: »

This is the answer I was hoping for, but I've just looked over the FAQs on the government H2B website and they state that you cannot pay into a cash ISA and the H2B ISA. This is confusing me because I have a cash LISA, not a stocks & shares LISA - so i'm not sure if they class this as as being a cash ISA.

No, they don't: HTB is categorised as a cash ISA, but a cash LISA falls within Lifetime ISAs rather than cash ones, so you're OK.

They're defined at https://www.gov.uk/individual-savings-accounts:

There are 4 types of ISA:

• cash ISAs
• stocks and shares ISAs
• innovative finance ISAs
• Lifetime ISAs

You can put money into one of each kind of ISA each tax year.

jcat12

This is very helpful and answers my question, thank you.

I've gone ahead and opened a H2B ISA just now.

biniosuaf

Hey both!

I'm in a quite similar situation but I want to use LISA towards buying home and H2B for general savings. I know H2B wasn't designed for that but the good rates are tempting. In T&Cs can't see anything saying no...

Questions:
1. Is it OK to open H2B ISA purely for savings, while having LISA opened?
2. Would I be OK to open H2B (got LISA already), save on both but use only LISA and expect the government 25% bonus for a first home purchase from LISA? Of course, I don't expect the bonus from both ISAs at the same time.
3. Thought about opening, both for my wife. As in the above posts, it seems to be OK to open both - LISA and H2B - and pay into them in the same tax year, right?

Thanks for your replies!
This forum wins!

masonic

biniosuaf wrote: »

Questions:
1. Is it OK to open H2B ISA purely for savings, while having LISA opened?
2. Would I be OK to open H2B (got LISA already), save on both but use only LISA and expect the government 25% bonus for a first home purchase from LISA? Of course, I don't expect the bonus from both ISAs at the same time.
3. Thought about opening, both for my wife. As in the above posts, it seems to be OK to open both - LISA and H2B - and pay into them in the same tax year, right?

Yes to all three. Of course once you buy a home, you'd no longer meet the criteria for holding a HTB ISA and would need to transfer to a normal ISA at some point thereafter.

20SmthngSver

Taking onto this. I have and pay into a Lifetime ISA and Help to Buy ISA. Can I open a flexible/instant/easy access ISA as well? Plan on using it to put matured regular savings money in (obviously no more than £13,600) so that I can hold it where and get interest without it counting towards my savings allowance.

eskbanker

20SmthngSver wrote: »

Taking onto this. I have and pay into a Lifetime ISA and Help to Buy ISA. Can I open a flexible/instant/easy access ISA as well? Plan on using it to put matured regular savings money in (obviously no more than £13,600) so that I can hold it where and get interest without it counting towards my savings allowance.

No, you can't pay into both a HTB ISA and a (non-HTB) cash ISA is the same tax year, unless both are with one of the small number of providers who support the 'split ISA' concept, whereby multiple cash ISAs are treated as if they were just one. More details at https://www.moneysavingexpert.com/savings/best-cash-isa/ in a section entitled "Can I split between a fixed and easy-access ISA (or regular saver ISA)?"....

20SmthngSver

Ah right okay. Thanks.

So I effectively can't use my full ISA allowance unless I'm with a provider who allows a split. With the current rates I'm better sticking to my Help to Buy ISA provider then.

masonic

20SmthngSver wrote: »

So I effectively can't use my full ISA allowance unless I'm with a provider who allows a split. With the current rates I'm better sticking to my Help to Buy ISA provider then.

You can use your full allowance, you would just have to use it within a S&S ISA or IF ISA. Money could be deposited just prior to the 5th April and the account transferred to a cash ISA on or after 6th April - beware of transfer charges if doing this.