Help To Buy

brownbillc

My son's got £6,000 in a HTB.  He won't be buying a house for a few years.  I'm advising him to put the money in a LISA intsead as he should be able to save more than £12,000.  I think he should close the HTB and quickly put the maximum allowable £4000 into a new LISA this year, then add the £2000 next tax year (after 5 April).  His annual interest receipts from savings is a few hundred pounds so he's way off the £1000 tax free limit.  Why do the articles advise you to transfer the money into a LISA from your HTB rather than just close the HTB?

eskbanker

Advice to transfer ISAs is usually fairly generic, and is aimed at doing so without impacting on current year allowances, which is an issue for those fortunate enough to be able to contribute £20K a year.  LISAs are unusual in that the same £4K limit applies whether new money or transferring, so the bottom line is that for someone unlikely to use much of their annual ISA allowance, there is no benefit in transferring a smallish balance from HTB to LISA, and withdrawing and paying in as new money is just as good.

brownbillc

Thanks very much.  I'll tell him to just get on with a bank transfer then, especially as Moneybox (the new proposed LISA) won't accept any more transfers this financial year...