Query about H2B ISA to LISA transfer

Glowhallow

Hi everyone,

I've had a H2B ISA for a couple of years but I want to convert this to a LISA. I have over £4,000 saved so if I just withdraw the full amount will I still get paid the interest on the account?

My new LISA is with Moneybox and I was originally going to transfer my H2B ISA there. However, it seems simpler for me to just deposit £4k into this new LISA. Do you know if this has to be added by a certain date or can it be anytime?

Thanks!

eskbanker

Glowhallow said:

I've had a H2B ISA for a couple of years but I want to convert this to a LISA. I have over £4,000 saved so if I just withdraw the full amount will I still get paid the interest on the account?

Yes, in that regard it's just like any other savings account, i.e. on closure you'll receive accrued but unpaid interest up to that date on a pro rata basis.

Glowhallow said:

My new LISA is with Moneybox and I was originally going to transfer my H2B ISA there. However, it seems simpler for me to just deposit £4k into this new LISA. Do you know if this has to be added by a certain date or can it be anytime?

It can be added at any time, but if you want it to count against your 2020/21 LISA allowance (leaving another £4K allowance available for 2021/22) then it needs to be in the LISA by 5 April.  This date is at the end of the long Easter weekend this year so even with a normal bank you'd need to have paid in by 1 April to be in the ending tax year, but Moneybox have some odd weekly collection cycle so you'd be best allowing a week or two before that....

https://www.moneyboxapp.com/faqs/how-can-i-pay-in-2/

Glowhallow

Thank you for that!

Another Q I had was around if there's any benefit for transferring my H2B money into a LISA vs just adding £4k to my LISA now? I've had the H2B ISA since around 2018 so is it possible to transfer the progress of the government bonus into the LISA, or they essentially completely separate?

grumiofoundation

For HTB ISA the government bonus is only paid upon completion. 

If you have £4000 ISA allowance remaining I can’t see any benefit in transferring HTB -> LISA (as opposed to paying in £4000 from other (non-ISA) money (this would also allow you to keep HTB ISA if you so wished)

If you don’t have all/some of the required £4000 available (I. e. not in HTB ISA) then You can just withdraw the amount you need from HTB and pay this into LISA. 

(In both cases assuming you have £4000 of ISA allowance remaining this tax year that allows you to do this).

Agree with eskbanker’s post don’t leave it too late! 

Glowhallow

I need to transfer to a LISA as the houses we're looking at buying will be out of the 250,000 max range of the H2B ISA.

The interest on my H2B ISA is only 1% which is the same as the LISA so it makes more sense to put extra money in there as I get it on the lump sum.

I'm assuming that I can't carry over the progress made towards the gvment bonus to my LISA then?

Glowhallow

What would be the use of the H2B ISA once I open my LISA, would it just become a regular savings account?

grumiofoundation

Glowhallow said:

I need to transfer to a LISA as the houses we're looking at buying will be out of the 250,000 max range of the H2B ISA.

The interest on my H2B ISA is only 1% which is the same as the LISA so it makes more sense to put extra money in there as I get it on the lump sum.

I'm assuming that I can't carry over the progress made towards the gvment bonus to my LISA then?

It will make no difference where the £4000 you pay into LISA comes from. (Edit - the way I read your post this was the question you were asking?)

For the lifetime ISA bonus is paid into your account (as opposed to HTB when paid at completion). 
https://www.moneyboxapp.com/faqs/when-are-lisa-bonuses-paid-out/

Assuming you haven't already opened a LISA remember this has to be open for 12 months before you can make a penalty free withdrawal!

Glowhallow

It will make no difference where the £4000 you pay into LISA comes from. (Edit - the way I read your post this was the question you were asking?)

It was thank you! But i'm asking a different question now which is if I can transfer the government bonus I have accumulated on my H2B ISA to my LISA. This is because my H2B has been open since 2018 wheras I have only just opened my LISA (we aren't looking to buy for a couple of yeas so this is fine).

If I can then it is worth going through the transfer process, but if I can't then I will just close my H2B ISA and keep my LISA as my main house saving pot.

grumiofoundation

Glowhallow said:

It will make no difference where the £4000 you pay into LISA comes from. (Edit - the way I read your post this was the question you were asking?)

It was thank you! But i'm asking a different question now which is if I can transfer the government bonus I have accumulated on my H2B ISA to my LISA. This is because my H2B has been open since 2018 wheras I have only just opened my LISA (we aren't looking to buy for a couple of yeas so this is fine).

You haven't actually accumulated any bonus in your HTB ISA - bonus for HTB ISA is paid on completion(as opposed to LISA which is paid in month after contribution) - as said in eskbanker's first reply it is just like a normal savings account at this point. 

Contribution limit is £4000 in any case. 

Glowhallow

You haven't actually accumulated any bonus in your HTB ISA - bonus for HTB ISA is paid on completion(as opposed to LISA which is paid in month after contribution) - as said in eskbanker's first reply it is just like a normal savings account at this point. 

Contribution limit is £4000 in any case. 

Thank so much for this, I feel a bit stupid for missing this obvious point

Thanks for your help!

thaddy

I transferred my savings from a Help to Buy ISA into a lifetime ISA as I believe you can't fund both ISAs in one financial year. I'm not sure what happens if you have more than £4000 in your Help to Buy ISA though so you may need to check that with Moneybox before doing the transfer.