Partially Transferring Nationwide Help to Buy ISA to Moneybox Lifetime ISA

little_spender

Hi all,

My partner had some serious health issues last year and accrued a fair bit of debt while off work. She's recently started a new job and we've calculated that it will take her 2 years to sort everything out, so we're not going to be looking at buying a house until mid-2026 at the earliest.

Given that we've now got 2 and a half years to play with, and my Nationwide Help to Buy ISA has just hit the £12k mark, it seems logical that I should start transferring the money over to a Lifetime ISA to reap the most reward. As per the MSE website, Moneybox have the highest interest rate at the moment, so I'm looking at them as my new potential provider, but I haven't opened an account yet.

From my understanding, I can only transfer £4k into the Lifetime ISA per tax year. I believe it'd have to be something like:
- £4k now
- £4k after April this year
- £4k after April next year

However, I'm a bit confused about the process of transferring the funds over, as Nationwide only seem to refer to full balance transfers, rather than partial transfers.

The Key Product Information page for the Help to Buy ISA on their website states: 
"18. If you decide to transfer your Help to Buy: ISA to another ISA manager you must transfer the entire balance. Your account will then be closed."
"25. If you transfer all of the money to an ISA with another ISA manager, which is not a Help to Buy: ISA, we will treat this as your request to close the account and will send you the closing documents."

Has anyone had any experience with partially transferring their Nationwide Help to Buy ISA to a Lifetime ISA with another provider? Is it possible?

Even if it is possible, it looks like the account will be closed immediately afterwards, so I'll have to find somewhere else to store the remaining funds.

What is my best option?
- Try to do a partial transfer?
- Keep the Help to Buy ISA, withdraw £4k each time and transfer this into the Lifetime ISA myself? 
- Close the Help to Buy ISA, withdraw the full £12k, deposit everything into another savings account and transfer £4k manually into the Lifetime ISA each time? I have a Flexible Saver with Ford Money (4.85% interest) already, so I can use that if needed.
- Something else?

eskbanker

How much of your annual £20K ISA contribution allowance are you likely to be using each year?

If you plan to use it fully then you could potentially transfer fully out of the HTB into a cash ISA (that allows partial transfers out) and drip-feed the LISA from there, but if you're unlikely to need the full allowance then you can withdraw from the HTB to your Ford saver (or a better one paying over 5%) and drip-feed the LISA from there instead, although you'd also need to keep an eye on whether you'd pay any tax on the savings in the interim.

little_spender

eskbanker said:

How much of your annual £20K ISA contribution allowance are you likely to be using each year?

If you plan to use it fully then you could potentially transfer fully out of the HTB into a cash ISA (that allows partial transfers out) and drip-feed the LISA from there, but if you're unlikely to need the full allowance then you can withdraw from the HTB to your Ford saver (or a better one paying over 5%) and drip-feed the LISA from there instead, although you'd also need to keep an eye on whether you'd pay any tax on the savings in the interim.

Thank you for the speedy reply!

I don't have any other ISAs at the moment, unfortunately. Am I right in thinking that I can't open a regular cash ISA and open a cash Lifetime ISA at the same time? So it's a case of drip-feeding into the Lifetime ISA either from the Help to Buy or the Ford Saver?

I only got out of debt myself last April, so I've been steadily rebuilding my savings. Right now, I've got £1.6k in the Ford Saver and £2k in a HSBC Online Bonus Saver (2% interest, plus a further 2% bonus if no withdrawals). Historically, I've been depositing £150 into the Ford Saver and £250 into the Online Bonus Saver each month. However, I've recently had a pay rise and will obviously no longer need to pay £200 into the Help to Buy each month, so I was looking at putting £500/month into the Ford Saver and £300/month into the Online Bonus Saver. The Ford Saver interest is calculated daily and paid annually in September, while the Online Bonus Saver interest is calculated daily and paid monthly, but will mature in June.

Based on my previous plans, my rough calculations suggest I'd be looking at probably around £130 interest from Ford and £70 interest from HSBC. If I moved all £12k to the Ford Saver, I think it'd be more like £460 interest, as obviously £8k will be moved into the Lifetime ISA within a few months, so should still be well under the £1k tax allowance. Although, it may be easier (and avoid any headaches) to withdraw £4k at a time from the Help to Buy and transfer that straight into the Lifetime ISA.

eskbanker

little_spender said:
Am I right in thinking that I can't open a regular cash ISA and open a cash Lifetime ISA at the same time?

No, they're different types so you can fund both concurrently.

Angelica123

Is there a reason you are paying into the HSBC Online Bonus saver? It is more restrictive than your Ford Money saver and worst interest rate. I certainly wouldn't add any more into it. 

The HTB interests are not competitive so if you are opening LISA, it doesn't make sense to just withdraw 4k and leave HTB open with 8k. That 8k will be earning more for you in either a regular cash ISA or easy access saver.