Transferring help to buy funds to a LISA

conorp

I opened a help to buy ISA a few years ago, but have recently realised that I'd be much better off saving using a LISA (LISAs were only introduced after I'd been saving to the help to buy fund - but the higher house buying limit, larger amount that can be put in make it the more sensible choice).
I currently have about £12,500 saved in my help to buy ISA - from what I understand, in order to transfer this money to my LISA I basically have to close my help to buy ISA, and then I can transfer a maximum of £4000 of my saved £12,500 into the LISA. I will then have to wait until the next tax year in order to transfer another £4000 across. Is this correct? It seems a bit unfair that I saved using the older scheme and that there's no way I can now just transfer all of the funds across in one go.
Also - are there any charges I should be aware of if I close my help to buy ISA and withdraw the money without putting towards a house?
Any advice would be much appreciated.

masonic

There was a 12 month time window after LISAs were introduced where those with HTB ISAs could make a one-time transfer of the whole balance of their HTB ISA in addition to the annual £4k LISA limit. But that window closed a few years ago. So rather than being unfair, it's just unfortunate that you didn't learn of this widely publicised option for those wishing to switch from HTB ISA to LISA when LISAs were first launched.

There is no need to close your HTB ISA and then transfer the money to your LISA, you can simply withdraw £4k per tax year and pay it into the LISA until your HTB ISA is empty. You can keep paying £200 per month into your HTB ISA if you benefit from a decent interest rate.

bowlhead99

masonic said:

There was a 12 month time window after LISAs were introduced where those with HTB ISAs could make a one-time transfer of the whole balance of their HTB ISA in addition to the annual £4k LISA limit. But that window closed a few years ago. So rather than being unfair, it's just unfortunate that you didn't learn of this widely publicised option for those wishing to switch from HTB ISA to LISA when LISAs were first launched.

There is no need to close your HTB ISA and then transfer the money to your LISA, you can simply withdraw £4k per tax year and pay it into the LISA until your HTB ISA is empty. You can keep paying £200 per month into your HTB ISA if you benefit from a decent interest rate.

Agreed with the above, just to answer the other part of the question - no there is no charge or penalty for closing a help to buy ISA or for withdrawing the money, whether or not you put it towards a house. If you put it towards a house, you get a bonus ; if you don't you don't.  That's a different setup from the LISA where you get the bonus shortly after each contribution is made but are penalised if you withdraw it other than for a qualifying reason.

Using the LISA paying in £4k at the start of every tax year it would take it would take you up to April 2022 to contribute £12k and get the same £3k bonus as you could have from the HTB with your current balance. The advantage is that while HTB's bonus is capped at £3k, you can keep on paying in and getting more and more bonuses (e.g. by April 2025 you could have paid £24k into the account and got £6k of bonuses), and it can be used to get a higher-valued property (outside London), so it is a more lucrative scheme if you'll make use of those features.