ISA query

chunky_monkey1878

My son has maxed out his help to buy ISA with £14,000

He has also got £15,000 in an instant saver (interest is only 1.5%) and wants to maximise interest.

We are not sure what the rules are (it says you can have up to £20,000 in an ISA but don’t know if that includes the help to buy one or not or if you’re allowed to put £20,000 in an ISA each year?

The help to buy is meant to give him an additional 25% of what he has saved. We think the max you’re meant to have in one is £12,000 but when he buys a house they’re meant to give him another 25% which is £3,000 and he doesn't want to lose the benefits of that.

He doesn't want to put 15k in another ISA and then find he can’t have the bonus on the help to buy ISA in future?

Are you able to clarify/confirm the facts and suggest what he is best doing please?

Mark_d

You can contribute up to £20k into ISA each year, including help to buy ISA.  This limit is about the money that you put in.

This year your son could put £4k in to help to buy ISA and all his £15k savings into a cash ISA.  Next year he can withdraw some money from Cash ISA and use it to fund his help to buy ISA if needed.

MX5huggy

He should consider transferring the HtB ISA to to a Lifetime ISA the bonus is not limited to £3000 then. https://blog.moneysavingexpert.com/2021/03/martin-lewis--should-i-move-my-help-to-buy-isa-into-a-lifetime-i/?_gl=1*1av4sw*FPAU*MTIzOTUwNDM3MC4xNzE5Njk5ODc1*_ga*MTM0NjE4MzY5Ny4xNzE5ODc1MzM1*_ga_X74CWQS9F0*MTcyMDQzMzIyMy4xMC4xLjE3MjA0MzM0MjUuMC4wLjM2MzI0OTEyNw..

gravel_2

Mark_d said:

You can contribute up to £20k into ISA each year, including help to buy ISA.  This limit is about the money that you put in.

This year your son could put £4k in to help to buy ISA and all his £15k savings into a cash ISA.  Next year he can withdraw some money from Cash ISA and use it to fund his help to buy ISA if needed.

This response seems mixed up. The post is about H2B ISA which is already maxed and so £4k cannot be contributed. The son would need to first transfer the H2B over to a LISA product in tranches (£4k each tax year over 3-4 tax years). Only then can they contribute new money to a LISA. This also only works if the son doesn't expect to buy before fully transferring to a LISA.

The rest is broadly correct - 20k total ISA allowance per tax year. Based on the OPs description it seems likely that NO money has been paid into H2B this tax year and the whole £15k can be put into a high yield Cash ISA.