Getting confused with Isa, HTB, Lisa, S&S please help?

thecatizzle

I've been reading all the forums here and reddit and googling like mad but I think I'm confusing myself or misreading information, I'm sorry for being so clueless but can anyone clarify my situation.

Opened a barclays HTP isa last year (tax year 19/20) - I have a direct debit set up that puts £200 in every month and it is currently still ongoing.
This tax year 20/21 I opened an ISA with ford money, (I had an expired paragon ISA and just transferred the entire balance into this new account, I don't make any other payments into this account).
Am I doing something wrong by continuing my direct debit into my HTB? I keep seeing the odd comment that you can't contribute to two cash ISAs so I'm worried I'm in breach of the rules.
I was considering two different things.
1. transfer 4k from the ford ISA into a LISA. I think this is legal to do, you can have a LISA and a HTB and a cash isa, I think... but will I occur any penalties for transferring money out of the ford ISA? I always thought once you put the money into an ISA it is locked. 
2. Invest in index funds through my isa (I will need to do some significant research before I try this, I think ford money may have been the wrong account to choose for this option, can i transfer the entire ford isa to another provider without penalty? again more research needed)

I read that people were worried the gov would remove the LISA bonus due to pandemic/economy so I was hoping to invest before it's too late. I already feel like I'm behind I wish I had really started looking into my finances sooner.

Part of the issue is that I cannot access both my barclays htp (they removed their app services and in order to use their website i need a bank card which i dont have)  as well as the new ford isa, (it turns out they posted me the wrong username, i managed to get someone on the phone after 2 months of trying and they said they will post out a new username but i've been waiting another month!) I will be tackling these issues when the lock down eases and services are more accessible.

Long term goal is: FTB house within the next 10 years. Any advice? Thanks

masonic

thecatizzle said:

Opened a barclays HTP isa last year (tax year 19/20) - I have a direct debit set up that puts £200 in every month and it is currently still ongoing.
This tax year 20/21 I opened an ISA with ford money, (I had an expired paragon ISA and just transferred the entire balance into this new account, I don't make any other payments into this account).
Am I doing something wrong by continuing my direct debit into my HTB?

No there is nothing wrong with what you've described, assuming you used Ford Money's ISA transfer process and didn't just transfer the money yourself.

thecatizzle said:

I keep seeing the odd comment that you can't contribute to two cash ISAs so I'm worried I'm in breach of the rules.

You can't contribute to more than one cash ISA per tax year, but you haven't done that. Transferring an old ISA does not count as contributing to an ISA.

thecatizzle said:

I was considering two different things.
1. transfer 4k from the ford ISA into a LISA. I think this is legal to do, you can have a LISA and a HTB and a cash isa, I think... but will I occur any penalties for transferring money out of the ford ISA? I always thought once you put the money into an ISA it is locked. 
2. Invest in index funds through my isa (I will need to do some significant research before I try this, I think ford money may have been the wrong account to choose for this option, can i transfer the entire ford isa to another provider without penalty? again more research needed)

1. Yes you can transfer up to £4k per tax year from an existing cash ISA to a LISA (or just withdraw the money and pay it into the LISA if you aren't in any danger of exceeding your £20k ISA allowance as a result). There is no limit to the number of ISAs you can have, but you can only contribute to one of each type per tax year. You cannot contribute to a HTB ISA and another cash ISA because both are cash ISAs, but you aren't intending to do that. Lifetime ISAs are a different type of ISA.

2. For that you would need a S&S ISA (or LISA), so would need to perform another transfer. Given you intend to buy a house within 10 years, if this money is to be used towards the house purchase, investing it now may be unwise, unless you can be flexible and delay your house purchase should there be an untimely stockmarket crash.

Whether there is a penalty depends on which Ford Money ISA you hold. If it is a fixed term account, you can expect to pay an interest penalty for breaking the fix early.

thecatizzle said:

Part of the issue is that I cannot access both my barclays htp (they removed their app services and in order to use their website i need a bank card which i dont have)  as well as the new ford isa, (it turns out they posted me the wrong username, i managed to get someone on the phone after 2 months of trying and they said they will post out a new username but i've been waiting another month!) I will be tackling these issues when the lock down eases and services are more accessible.

That's unfortunate, but it won't prevent you from performing an ISA transfer, which relies on you using your new provider's transfer process.

thecatizzle

masonic said:

thecatizzle said:

Opened a barclays HTP isa last year (tax year 19/20) - I have a direct debit set up that puts £200 in every month and it is currently still ongoing.
This tax year 20/21 I opened an ISA with ford money, (I had an expired paragon ISA and just transferred the entire balance into this new account, I don't make any other payments into this account).
Am I doing something wrong by continuing my direct debit into my HTB?

No there is nothing wrong with what you've described, assuming you used Ford Money's ISA transfer process and didn't just transfer the money yourself.

thecatizzle said:

I keep seeing the odd comment that you can't contribute to two cash ISAs so I'm worried I'm in breach of the rules.

You can't contribute to more than one cash ISA per tax year, but you haven't done that. Transferring an old ISA does not count as contributing to an ISA.

thecatizzle said:

I was considering two different things.
1. transfer 4k from the ford ISA into a LISA. I think this is legal to do, you can have a LISA and a HTB and a cash isa, I think... but will I occur any penalties for transferring money out of the ford ISA? I always thought once you put the money into an ISA it is locked. 
2. Invest in index funds through my isa (I will need to do some significant research before I try this, I think ford money may have been the wrong account to choose for this option, can i transfer the entire ford isa to another provider without penalty? again more research needed)

1. Yes you can transfer up to £4k per tax year from an existing cash ISA to a LISA (or just withdraw the money and pay it into the LISA if you aren't in any danger of exceeding your £20k ISA allowance as a result). There is no limit to the number of ISAs you can have, but you can only contribute to one of each type per tax year. You cannot contribute to a HTB ISA and another cash ISA because both are cash ISAs, but you aren't intending to do that. Lifetime ISAs are a different type of ISA.

2. For that you would need a S&S ISA (or LISA), so would need to perform another transfer. Given you intend to buy a house within 10 years, if this money is to be used towards the house purchase, investing it now may be unwise, unless you can be flexible and delay your house purchase should there be an untimely stockmarket crash.

Whether there is a penalty depends on which Ford Money ISA you hold. If it is a fixed term account, you can expect to pay an interest penalty for breaking the fix early.

thecatizzle said:

Part of the issue is that I cannot access both my barclays htp (they removed their app services and in order to use their website i need a bank card which i dont have)  as well as the new ford isa, (it turns out they posted me the wrong username, i managed to get someone on the phone after 2 months of trying and they said they will post out a new username but i've been waiting another month!) I will be tackling these issues when the lock down eases and services are more accessible.

That's unfortunate, but it won't prevent you from performing an ISA transfer, which relies on you using your new provider's transfer process.

masonic said:

thecatizzle said:

Opened a barclays HTP isa last year (tax year 19/20) - I have a direct debit set up that puts £200 in every month and it is currently still ongoing.
This tax year 20/21 I opened an ISA with ford money, (I had an expired paragon ISA and just transferred the entire balance into this new account, I don't make any other payments into this account).
Am I doing something wrong by continuing my direct debit into my HTB?

No there is nothing wrong with what you've described, assuming you used Ford Money's ISA transfer process and didn't just transfer the money yourself.

thecatizzle said:

I keep seeing the odd comment that you can't contribute to two cash ISAs so I'm worried I'm in breach of the rules.

You can't contribute to more than one cash ISA per tax year, but you haven't done that. Transferring an old ISA does not count as contributing to an ISA.

thecatizzle said:

I was considering two different things.
1. transfer 4k from the ford ISA into a LISA. I think this is legal to do, you can have a LISA and a HTB and a cash isa, I think... but will I occur any penalties for transferring money out of the ford ISA? I always thought once you put the money into an ISA it is locked. 
2. Invest in index funds through my isa (I will need to do some significant research before I try this, I think ford money may have been the wrong account to choose for this option, can i transfer the entire ford isa to another provider without penalty? again more research needed)

1. Yes you can transfer up to £4k per tax year from an existing cash ISA to a LISA (or just withdraw the money and pay it into the LISA if you aren't in any danger of exceeding your £20k ISA allowance as a result). There is no limit to the number of ISAs you can have, but you can only contribute to one of each type per tax year. You cannot contribute to a HTB ISA and another cash ISA because both are cash ISAs, but you aren't intending to do that. Lifetime ISAs are a different type of ISA.

2. For that you would need a S&S ISA (or LISA), so would need to perform another transfer. Given you intend to buy a house within 10 years, if this money is to be used towards the house purchase, investing it now may be unwise, unless you can be flexible and delay your house purchase should there be an untimely stockmarket crash.

Whether there is a penalty depends on which Ford Money ISA you hold. If it is a fixed term account, you can expect to pay an interest penalty for breaking the fix early.

thecatizzle said:

Part of the issue is that I cannot access both my barclays htp (they removed their app services and in order to use their website i need a bank card which i dont have)  as well as the new ford isa, (it turns out they posted me the wrong username, i managed to get someone on the phone after 2 months of trying and they said they will post out a new username but i've been waiting another month!) I will be tackling these issues when the lock down eases and services are more accessible.

That's unfortunate, but it won't prevent you from performing an ISA transfer, which relies on you using your new provider's transfer process.

Thank you so much for your help

Albermarle

I read that people were worried the gov would remove the LISA bonus due to pandemic/economy so I was hoping to invest before it's too late. I already feel like I'm behind I wish I had really started looking into my finances sooner.

Best to ignore this type of rumour, that the Govt. will do this or withdraw that . They are nearly always wrong and if they do withdraw a benefit like the LISA bonus , I am sure you would still keep any bonuses that you were due or already have.

I always thought once you put the money into an ISA it is locked. 

No that is not the case, although by withdrawing money from an ISA ( as opposed to transferring it) you do lose its tax free status. As Masonic said if your cash ISA was one with a fixed term/interest rate , you would be penalised for taking it early , but that would also be the case  it it was a non ISA savings account.

Are you aware that a basic rate taxpayer can earn up to £1000 in interest pa tax free , so for many smaller/medium size  savers , there is is no need to have a cash ISA at all for normal savings . Non ISA savings accounts pay a little bit better interest than cash ISA's usually .