Can you transfer a Help to Buy ISA into a Lifetime ISA and will it count towards your 4k allowance

therocpd

I have £4.4k in a help to buy ISA (In part because I've preferred the flexibility) 
The limit for a lifetime ISA is £4k a year
If I opened a liftetime ISA on 7th April 2021, Can I then pay in 4k over the year, pay a further £2.4k into my help to buy ISA, and in March 2022 transfer £6.8k balance from my help to buy ISA to the LISA so that the total is £10.8k. 
AND would all 10.8k get the 25% bonus?

The reason I am looking at it like this is I am now in a position where I can save much more (quitting smoking has been a godsend) but I also want flexibility to buy within the next year but to maximize the bonus if I buy in more than one year

Alexland

HTB ISA transfers would count towards the £4k per tax year LISA allowance (you can only earn up to £1k in bonus each tax year added into the account a month or two after each contribution or transfer) but would not count towards the overall £20k per tax year ISA allowance (as it is already in an ISA wrapper). Is there any reason you wouldn't open the LISA this tax year or have you already used all your ISA allowance? PS the tax year starts on the 6th not the 7th and the last chance to contribute each tax year can vary depending on provider's rules.

grumiofoundation

You can transfer help to buy to lifetime ISA but not exactly as you have described above.
Limit if £4000 per tax year so you couldn't transfer all of the 6.8k in March 2022.

All contributions (max. £4000 per tax year) get the government bonus (max. £1000 per teax year, paid ~5-7 weeks after contribution). 

Have you hit your 20k ISA limit this tax year? 

If not why not open a lifetime ISA now and pay/transfer* into Lifetime ISA this tax year? (you can contribute to help to buy and lifetime ISA in same tax year).
*Edit - see posts below re transfer 



Depending on chosen lifetime ISA provider you will need to make sure that your contributions count towards this tax year (e.g. moneybox dates in post below)
https://forums.moneysavingexpert.com/discussion/6246270/moneybox-20-21-end-of-tax-year-collection-timings#latest

Alexland

Confirmed

We are so late into this tax year now the only way to have confidence on getting a LISA contribution into the account to earn this year's £1k bonus would be to withdraw the money from the HTB ISA or elsewhere and deposit it into the LISA assuming the OP has enough overall ISA allowance remaining. Starting a transfer now risks the bonus being claimed in relation to the transferred money being added into the account next tax year

grumiofoundation

Alexland said:

Confirmed

We are so late into this tax year now the only way to have confidence on getting a LISA contribution into the account to earn this year's £1k bonus would be to withdraw the money from the HTB ISA or elsewhere and deposit it into the LISA assuming the OP has enough overall ISA allowance remaining. Starting a transfer now risks the money being claimed in relation to next tax year

I was going to suggest that but from the email I got from moneybox they said:

Please note, if you are transferring into a Lifetime ISA, we need to have received your transfer form by 31st March for your transfer to count for this tax year (2020-2021).

So that implies as long as transfer has started in time would be OK? Does that mean even if there was a delay meaning transfer doesn't occur before 5th april would still count as 2020/21 as long as started by 31st march (I know sometimes ISA providers info is not always 100% bang on so maybe this isn't correct..?). 

Personally if able to I would also do as you have suggested and withdraw/deposit manually to remove any risk (however small). 

Alexland

It might depend on the provider as there is the facility to make late bonus claims if a provider can be bothered but some might rely on automatically generating a bulk bonus claim each month by their computer query identifying any new money added into the account by contributions or transfer.

therocpd

Thanks for the responses!
So the reason I've not opened a LISA is because before I wasn't 100% confident I would be buying or buying any time soon. 
But since I quit smoking, and with lockdown meaning I can't really do anything I've been saving way more than ever before. 
When I opened the help to buy ISA I was able to save £200 a month easily but not much more so it made sense to keep it and retain flexibility if I didn't buy a house

However, more recently I've been saving more, often £400-600, and last month I saved £880

I've now save a total of £6811 Cash (£4436 in my help to buy ISA) which gives me a government bonus of £1109 so my total deposit is currently at £7920

With the announcement of the 5% deposit announced in the budget, I could afford a house in my area on my budget. Even now I have enough deposit for 10% on a house up to 110k (my parents have offered to top me up) 

If I get the LISA, I need to have had it a year which means I have to stop looking for now. 
I can't get bonus on both which is why I wanted to see if I could transfer without it counting towards the 4k limit. 

But it sounds (correct me if I'm wrong)
I could transfer 4k now before the end of the month to a LISA- would I get 25% bonus on that if I did? 
And then add another 4k over a year would mean by April 2022 I could have 8k in there and a 2k bonus? Is that right? 

eskbanker

therocpd said:

But it sounds (correct me if I'm wrong)
I could transfer 4k now before the end of the month to a LISA- would I get 25% bonus on that if I did? 
And then add another 4k over a year would mean by April 2022 I could have 8k in there and a 2k bonus? Is that right? 

You're not wrong and the situation is as you describe, but bear in mind that on or after 6 April 2022 you can pay in a further £4K into your LISA, thereby having up to £12K in there plus £3K bonus (plus interest).

therocpd

eskbanker said:

therocpd said:

But it sounds (correct me if I'm wrong)
I could transfer 4k now before the end of the month to a LISA- would I get 25% bonus on that if I did? 
And then add another 4k over a year would mean by April 2022 I could have 8k in there and a 2k bonus? Is that right? 

You're not wrong and the situation is as you describe, but bear in mind that on or after 6 April 2022 you can pay in a further £4K into your LISA, thereby having up to £12K in there plus £3K bonus (plus interest).

That's such a smart Idea!