Transferring HTB ISA to SnS LISA

bradleyaidanjohnson

I want to transfer my help to buy ISA to a new EQi Stocks and Shares LISA. And want to do it in the most efficient way. I’ll give the facts:

No current plans to buy soon

Currently £4,484.30 in the HTB ISA

Before the 2020/21 tax year began there was £3863.22 saved in the HTB ISA

I have contributed £600 to the HTB ISA so far this tax year

I have contributed £17,600 into a vanguard stocks and shares ISA this year (the plan previously being to contribute the max £2,400 per year into the HTB ISA to hit the £20,000 cap for the year)

I have a standing order to continue contributing £200 per month into the HTB ISA (which of course I can cancel at any time)

I have more than enough available cash reserves now to immediately hit the entire 2021/22 ISA cap again in April 2021 and intended to do so maximising the £20,000 ISA cap (£16,000 stocks and shares ISA, £4,000 new LISA) and continuing in that fashion for the foreseeable future. 

The question I have is simply: what is the most efficient way to make what will likely be multiple transfers into the new LISA? The government info is not very detailed and I’ve found some conflicting information. Namely:

“ You can transfer your Individual Savings Account (ISA) from one provider to another at any time.

You can transfer your savings to a different type of ISA or to the same type of ISA.

If you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it.

For money you invested in previous years, you can choose to transfer all or part of your savings.” -gov.uk

This makes it sound to me that I can only transfer £3863.22 to the LISA in 2020/21 and would need to invest the remainder in cash. Then I could transfer the remaining cash in the account in 2021/22. Is this correct?

Would an efficient plan be to transfer the £3863.22 immediately and top up with cash (£136.78). Then continue contributing £200 per month into the HTB ISA (with a final £63.22 payment April 1). Come 2021 April 6th there would be £5,000(+- market movement) In the LISA and £2300 ish (£621.08 remaining from the transfer + £1,663.22 of monthly deposits + 2% interest: £20 give or take) in the HTB ISA. 

Could I transfer the remaining £2300ish to the LISA and top up with cash (£1700 ish) to then have a remaining ISA allowance for 2021/22 of £18,300 ish and having had received the £2,000 of LISA bonus fro both years?

Am I missing something with this calculation? Is there a better way? Am I breaking any rules? Not trying to cheat. Just use the systems as they are laid out. Sorry for the long post but it’s a fairly detailed question! Thanks in advance

bowlhead99

At the moment you have £18200 used out of your 20/21 ISA allowance and so can make £1800 of 'new money' contributions to ISAs generally, ignoring individual product limits.  The limit on putting new money in does not include transfers of money that is already inside an ISA somewhere or other.

The easiest thing to do is probably:
a) Transfer £4k of your cash ISA into the LISA (which will be a mix of current and previous year money).  That would involve moving all the current-year money and part of the previous-year money. Then the LISA is full, but your remaining allowance hasn't changed.

b) Keep contributing the £200pm into your HTB if you like the cash interest rate it pays and don't want investment exposure on it ; or contribute £200pm into the S&S ISA if you are happy to have the investment exposure. Either of those methods will use up the rest of your 20/21 ISA allowance

c) At the start of next year (April '21), transfer the rest of the HTB into the LISA and give up on using the HTB, top up the LISA to it's £4k limit using your other resources, and max out the S&S ISA over the course of the rest of 21/22

As an alternative, you could do what you suggest and transfer only previous year money (not current year £600) from the HTB into the LISA, and then you would need to manually top up the LISA to get the maximum amount possible into it, and then having manually topped up the LISA you would have reduced the amount allowed to be put into the HTB this year so would have to restrict one of your future months' contributions to the HTB to avoid breaching the £20k max across all products for 20/21.

bradleyaidanjohnson

Thank you for the detailed response. The question I have is based on your A scenario:
“ If you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it.”

The wording of that makes it sound to me like if you wish to transfer any money put in this tax year the entire isa balance must be transferred. But your interpretation suggests that if you transfer any money of the current year you must transfer all money put in the current year. I want to make sure which of these is definitely accurate

badger09

bradleyaidanjohnson said:

Thank you for the detailed response. The question I have is based on your A scenario:
“ If you want to transfer money you’ve invested in an ISA during the current year, you must transfer all of it.”

The wording of that makes it sound to me like if you wish to transfer any money put in this tax year the entire isa balance must be transferred. But your interpretation suggests that if you transfer any money of the current year you must transfer all money put in the current year. I want to make sure which of these is definitely accurate

This is HMRC rule - all current year subscriptions must be kept together.

bradleyaidanjohnson

You’re a legend my friend. Seems simple enough in that case. Transfer £4,000 now. Transfer the remainder next April. Thank you!