H2B ISA almost done next steps advice?

MAWileman

Hi all,
Firstly hope you are all well at these testing times and I apologise for what will seem like a somewhat clueless post but I am one of those people that just works and puts money in the bank and I know I need to get better so any and all advice is welcome.

I am 4-6 payments away from the point where I will end up capping out the bonus on my H2B ISA  currently around 11.5k so with the new tax year around the corner i'm unsure what to do next with my money to make the best use of it? I'm not looking to buy a house any time soon with all the current going ons in the world. I have a Santander 123 account which I can move money from so I could top up/Cap my £20k tax free allowance in my H2B ISA which still has a decent rate (1.85%) but will that money be locked in as house deposit money only? i.e. If the H2B account was at 20k at the time of buying a house but I withdrew 1k would the government take £200 out of my bonus even though I am over the 12k which they would give the bonus on?

Is a H2B isa considered a cash ISA or a innovative finance ISA and therefor could I open a cash or a stocks and shares ISA?

Thoughts/experiences on a stocks and shares ISA given the current situation?

Thanks in advance for your help/suggestions.

Alexland

The 25% bonus claim is based on the HTB ISA account (a type of Cash ISA) final balance at closure not a forensic analysis of the in and out transactions that have occurred over the life of the account. If that's the best interest rate you can find which meets your access requirements then keep going.

I would be a lot more worried about 100% permanent capital loss with a IF ISA as the P2P platforms seem to be struggling. A sensible S&S fund could be an opportunity right now but is only suitable if you don't need access to the money for 5+ years preferably longer to reduce the chance of withdrawing less than you contributed. Often the best way to invest in S&S is via your pension.

MAWileman

After a bit of additional reading It appears I cannot put additional funds into my H2B to cap it for the year I would have to invest in another type of ISA/account like an S&S.

masonic

Who is your HTB ISA held with? You might be lucky and it is a split-ISA provider, meaning you could open an additional cash ISA with the same provider and deposit the extra funds you have. If not, you could park the cash in a S&S ISA (without buying any investments), then transfer to a cash ISA after 5th April. Or simply take the view you are going to start investing some of your money as you aren't nearing the time you will buy a home.

Going forward, I'd echo Alex's comments about a S&S ISA being very much preferable to an IF ISA (where the prospects for P2P lending is dire), if you're relaxed about when you will buy and wouldn't mind if it is in the latter part of this decade. My personal view is that lower risk investments have fallen a lot further than they should, so their prospects in the short term are better than usual, but there can be no certainty when it comes to investment returns.