Help to Buy transfer to Cash ISA

AndyTh_2

Needless to say, I'm not happy hearing Halifax is going to limit interest payments for balances above £12k on their Help to Buy ISA.
I ended up paying £1k more than the bonus limit into it, and along with previous interest payments, that'd be money earning nothing.
So I want to transfer everything over the £12k to a cash ISA, but keep the £12k in a H2B ISA for now. From looking my two existing cash ISAs, one doesn't offer any form to do so, and the other mistakenly gives a H2B form for transferring to a H2B account.

If I can't do a partial transfer, would people think it reasonable to take out this year's ISA subscription payments and pay them into the Cash ISA? (I want to use up my full £20k allowance).

Personally I just wish they brought back the H2B to Lifetime ISA transfer with no effect on tax free status (or just reclass H2B as Lifetime ISAs). I didn't do it at the time when it was like that as only S&S Lifetime ISAs were available.

eskbanker

The first cash LISA was introduced a couple of months after the first S&S one, but that's all history now.  Moving forward, unless your property purchase is somewhere off in the distant future then you might find that taxable accounts offer better interest than (non-HTB) cash ISAs so it may not be necessary to limit yourself to those....

masonic

Yes, you could transfer all of the current year HTB ISA contributions to a cash ISA and top up to use your £20k allowance, but if you are planning to use that money towards a house purchase, why put it in a cash ISA? Withdrawing the excess and putting it in a normal savings account is likely to get you a better return.

The option to transfer your HTB ISA in full to a LISA was offered in the tax year LISAs were first introduced (2017/18) to allow people to switch from HTB ISA to LISA. Skipton launched the first cash LISA in June 2017, so there were cash LISA options for most of the tax year in which this could be done.

AndyTh_2

but if you are planning to use that money towards a house purchase, why put it in a cash ISA?

I'm not actually now going to use the H2B (house price <= £450k in London, £250k elsewhere) for my first property, as I decided I'll not move to London but won't be buying a house still < £300k.
I keep it for the moment for the interest and the slim hope I can some point transfer it to my new Lifetime ISA.

unless your property purchase is somewhere off in the distant future then you might find that taxable accounts

I already earn more interest in taxable accounts than the personal savings allowance, so more taxable accounts aren't much good.
In any case, I guess I answered part of my question already about transferring through ISA transfer. If I can't to a Lifetime ISA, then I obviously can't to a Cash ISA either.
I don't know though if I can take out this tax-year's subscription and put in £20k into other ISAs (I was going to originally put the remainder into a S&S ISA)

eskbanker

AndyTh_2 said:

In any case, I guess I answered part of my question already about transferring through ISA transfer. If I can't to a Lifetime ISA, then I obviously can't to a Cash ISA either.

No, that's not true, as masonic said, you can transfer money from a HTB ISA to another cash ISA, although you'd need to ensure that all your current year cash/HTB ISA money is kept together in the same place and/or you can transfer up to £4K from HTB ISA to LISA.

AndyTh_2 said:

I don't know though if I can take out this tax-year's subscription and put in £20k into other ISAs (I was going to originally put the remainder into a S&S ISA)

No, you can't start again with a fresh £20K allowance but could pay whatever hasn't gone into the HTB into a S&S ISA if you wished, i.e. if circa £2K has been paid into the HTB (and no other ISA subscriptions made this tax year to date) then you could pay £18K into a S&S ISA.

masonic

AndyTh_2 said:
I keep it for the moment for the interest and the slim hope I can some point transfer it to my new Lifetime ISA.

I think you'll be disappointed if you think the Government will pay any attention to a legacy product like the HTB ISA, which is no longer on sale and is going to be phased out completely in less than 9 years.

AndyTh_2 said:

I already earn more interest in taxable accounts than the personal savings allowance, so more taxable accounts aren't much good.

At today's interest rates this is a considerable sum of cash, suggesting you can already afford to complete a house purchase. If you plan to buy a house valued at >£250k and <£300k as you state above, then consider that even just a modest 2% increase in house prices would amount to you paying £5.5k more, which is more than the HTB ISA bonus you have so far accrued, and much more than you can earn in a cash LISA in a single tax year, so delaying your house purchase to maximise the benefit of these schemes is likely to be counterproductive.

The HTB ISA is probably still the best place for £12k of your savings. Premium bonds are going to be the best place for the next £50k of your savings with today's interest rates being <0.8% even for a 1 year fixed term account. Savings from £62k-£142k could be placed in taxable accounts without breaching the PSA if you are a higher rate taxpayer; if you are a basic rate taxpayer then your first £222k of savings could be covered by PB and taxable savings accounts without breaching the PSA.

AndyTh_2 said:

I don't know though if I can take out this tax-year's subscription and put in £20k into other ISAs (I was going to originally put the remainder into a S&S ISA)

If the HTB ISA permits flexible withdrawals, then you can withdraw everything you paid in this tax year and you will then have your full allowance to split between non-cash ISAs. If your HTB ISA is not flexible, then you would have to use the ISA transfer process to move the funds to a S&S ISA as you would to transfer to another cash ISA.

If these are funds you wish to put towards your house purchase, it would be unwise to invest them.

AndyTh_2

Sorry I put the arrow the wrong way around for the £300k, I mean > £300k.

In any case I never said I was putting off buying a house to maximise gains, I'm just trying to maximise gains, and I already have things like premium bonds, so I'm not looking for advice on where else to put it.

I think the basic answer I was looking for has been answered, so thanks. I'll wait to see what one of my Cash ISA providers says about ISA transferring, or otherwise just accept I can't keep the full £20k ISA allowance this year.

masonic

AndyTh_2 said:

otherwise just accept I can't keep the full £20k ISA allowance this year.

You can use the full £20k ISA allowance either way. If you can't do a partial transfer of all of your current year money from your HTB ISA, and your HTB ISA is not flexible, you can still pay the remainder into a S&S ISA (without investing it) and then transfer it in full to a cash ISA in the 2021/22 tax year.

AndyTh_2

masonic said:

AndyTh_2 said:

otherwise just accept I can't keep the full £20k ISA allowance this year.

You can use the full £20k ISA allowance either way. If you can't do a partial transfer of all of your current year money from your HTB ISA, and your HTB ISA is not flexible, you can still pay the remainder into a S&S ISA (without investing it) and then transfer it in full to a cash ISA in the 2021/22 tax year.

Yep, that was my plan before the interest rate adjustment. At least next tax year onwards I won't have to consider doing that anymore if I want more in my Cash ISA (if I'm not otherwise just refilling the flexible withdrawls after a house purchase).