2 help to buy ISAs open by mistake

Hello! I’d really appreciate any help with my query - I opened a help to buy isa right before they closed in November 2019 but somehow managed to open with two separate banks (Lloyds and nationwide) I haven’t paid into the Lloyds one this tax year and took out the money I had pre April and put in my nationwide. I am very worried that when it comes to using my ISA it may look fraudulent as I have two although only paying into one. I’ve been told by nationwide I need to go into Lloyds and get them to close the ISA and this won’t affect the nationwide ISA (cans it’ll be used to buy a property in future) but I’m very anxious as I’ve obviously been saving a every month and worried if I close my Lloyds ISA it will close the scheme all together? Can anybody offer any advice with this? Thank you so much! 

Replies

  • eskbankereskbanker Forumite
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    If you paid into both in 2019/20 then I'd have expected HMRC to have acted on this by now, but if you've only paid into one in 2020/21 then you shouldn't have an issue with this year's contributions.  Were Nationwide commenting about your Lloyds one in isolation or in response to you asking them a question?

    Ultimately it's only HMRC who can advise whether you're storing up an issue for the future though....

    Is the Lifetime ISA scheme of interest to you?  If you closed down both HTBs and funded a LISA instead that would sidestep any issue, if you won't be buying for at least a year. 
  • Thanks for your reply!! I’m really quite clueless with finances I just save money and actually have no idea where to put it... well I was worried so I spoke to both Lloyds and nationwide and Lloyds said they only “close” help to buy ISAs when customers are then buying a house so they seemed unsure and Nationwide were adamant my money with them would be safe but only Lloyds can close the account as they can’t transfer over, they stated they’d never seen this situation before (!!) 
    do you mind advising the pros of a LISA? I’ve had a quick look- I wouldn’t be buying for at least another two years... does it work the same a help to buy isa? Thank you again 
  • eskbankereskbanker Forumite
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    https://www.moneysavingexpert.com/savings/lifetime-isas/ explains LISAs - the scheme isn't identical to HTB but does offer the same 25% government bonus, albeit delivered in a different way, in that LISA bonuses are added as you go while with HTB it's in one go when buying.  Apart from the withdrawal penalty if buying within a year of opening a LISA, that penalty is also applied if you end up withdrawing the money for any reason other than buying a first property, unless you keep the money in there until you're 60, so it's less flexible than HTB in that regard.

    However, plus points include a higher property value cap (£450K anywhere in the UK) and a more generous annual contribution allowance of £4K, without this being split into individual monthly allowances in the way that HTB does.  Other negatives include a smaller market with few providers, and less generous interest rates....
  • Thank you this makes sense, mostly I just want to get value for money I save quite a lot and don’t want this wasted in the end. I’m just worried about my HTB looking dodgy due to having two as somehow I found a loop in the system I wasn’t even looking for - the fact HMRC haven’t contacted yet may be a good sign... but perhaps I should contact them directly to see if they can help. 
    You can definitely transfer HTB money into a LISA? 
  • edited 21 December 2020 at 6:55PM
    masonicmasonic Forumite
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    edited 21 December 2020 at 6:55PM
    I see no advantage in pro-actively contacting HMRC and only potential disadvantages.
    You can transfer up to £4k into a LISA each tax year from other types of ISA. If you are going to get nowhere near your overall £20k ISA allowance, then it is perhaps a little easier to withdraw from the HTB ISA and pay into your LISA without going through the formal transfer process.
  • eskbankereskbanker Forumite
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    masonic said:
    I see no advantage in pro-actively contacting HMRC and only potential disadvantages.
    I was thinking of the scenario painted in this thread from a year ago, where the HTB bonus application was rejected because the applicant had multiple HTB ISAs open concurrently.  Not an identical scenario if OP here is able to close one down, but the rule quoted was the one about not having multiple HTB ISAs 'at any time' and the issue was only flagged when way too late, so the poster there was unhappy that they'd been able to get into an invalid position without warning from the institutions concerned (or HMRC), with the implication being that they'd have done something about it if aware of the ramifications....
  • edited 21 December 2020 at 8:27PM
    masonicmasonic Forumite
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    edited 21 December 2020 at 8:27PM
    eskbanker said:
    masonic said:
    I see no advantage in pro-actively contacting HMRC and only potential disadvantages.
    I was thinking of the scenario painted in this thread from a year ago, where the HTB bonus application was rejected because the applicant had multiple HTB ISAs open concurrently.  Not an identical scenario if OP here is able to close one down, but the rule quoted was the one about not having multiple HTB ISAs 'at any time' and the issue was only flagged when way too late, so the poster there was unhappy that they'd been able to get into an invalid position without warning from the institutions concerned (or HMRC), with the implication being that they'd have done something about it if aware of the ramifications....
    That comment was really intended to cover the eventuality that there was a switch to the LISA, but I'd still have misgivings about alerting HMRC to the issue even if continuing with the HTB ISA - though in this situation one can at least know if it is a definite no-hoper.
    The missing information here that is critical is what was the exact date the Lloyds HTB ISA vs Nationwide HTB ISA received their opening deposit. Assuming the worst, that the Lloyds HTB ISA was the first, then I do not see a path to a successful bonus claim. However the second account does not invalidate a claim using the first, as that precedent in the earlier thread shows.
    In the event the Nationwide HTB ISA is the second HTB ISA, the risk is that some general reassurance is given, but the bonus claim nevertheless fails, and what was actually stated is not sufficient to make HMRC liable for the consequential loss.
    In the event the Nationwide HTB ISA is the first HTB ISA, then the risk is some of the subscriptions to the Nationwide HTB ISA have breached the contribution limits. It appears the Lloyds HTB ISA was flexible, so based on the information HMRC currently holds there would be no way for it to determine this since all of the subscriptions were withdrawn within the tax same year. The annual return will contain a 'date of first subscription' marker, but the scenario would be indistinguishable from that in which there was an invalid combination of ISAs but at no time was a subscription limit breached. Further investigation/repair will likely reveal the actual sequence of events.
    TBH the only safe option I see here is to switch to a LISA - given the HTB ISA has been open for about 13 months, and assuming the LISA can be held for a year before any house purchase is made. Certainly if that route is taken, I would not be saying anything to HMRC.
  • Jessiejane17Jessiejane17 Forumite
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    This actually helps so much and although it’s sounding bleak for my help to buy ISA I’d  much rather be saving money knowing I will definitely be using it to buy a house, I’m not a lucky person and it would be just my luck that at the end of saving a couple grand HMRC would say no due to the error of having two open. I think a LISA is safe and actually better as I can save more each year - really appreciate both help I will be searching ways of opening a LISA and transferring my money ASAP. All the best in new year 
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