Halifax Help To Buy ISA / Lifetime ISA / Cash ISA

Johntea

I have a long standing Halifax Help To Buy ISA currently at roughly £23,000

I set it up a long time ago and just had a £200 monthly standing order across to it, which I ended after June 2024 and now send £200 a month across to a T212 Cash ISA instead due to the much higher interest rate

If I open a Lifetime ISA before the end of this tax year and transfer £4000 across then another £4000 immediately in the new tax year would that affect my ability to potentially use the Help To Buy ISA in future? (I understand I can only use one or the other with a house purchase of course)

That would reduce my Halifax Help To Buy ISA to around £15,000 and I could then move the remaining £3,000 into my Cash ISA (nowhere near hitting the £16,000 limit this year assuming I opened the Lifetime and used the remaining £4,000 of my allowance towards that)

My final question is how do I get the money 'out' of the Halifax - I know you can do complete ISA transfers but in this case I'm wanting to keep the ISA and just move partial funds elsewhere so is it just a case of a bank transfer out to my normal bank account then transfer myself?

Thanks

PRAISETHESUN

Don't withdraw the money yourself - always use the ISA transfer process. You will lose the tax-free status of your money and it will count towards this year's ISA limits if you then try re-deposit it into a new account, meaning you won't be able to deposit the full £23k in one go. Some providers allow partial transfer in/out so you'll need to check if your current/future ISAs allow this, but H2B ISAs are treated as cash ISAs for transfer purposes so it should be fairly straightforward to do a series of partial transfers to get your money where you want it to end up.

Obviously you are aware that you won't be able to use both a H2B ISA and a LISA for a property purchase. You'll need to decide which one you wish to use, and slowly transfer between them if you choose to go down the LISA route - there's little sense having both so it would be worth transferring any excess to a normal cash ISA after you max your LISA contributions. Keep in mind the £4k LISA limit also counts towards your £20k overall ISA limit.

Alexland

Whatever you do there's no point having more than £12k in your HTB ISA as the maximum bonus is £3k and there are better interest rates elsewhere. You are no longer restricted to contributing to one Cash ISA per tax year (although you can still only contribute to one LISA per tax year but you are free to transfer it elsewhere and continue contributing up to the annual limit).

The main disadvantages of the HTB ISA are the £250k property price cap outside London (the LISA is £450k everywhere), the £3k max bonus and that you need to claim the bonus by November 2030.

As you say you will be able to quickly build £8k of contributions in the LISA in the next few months and as you need to have the account for a year before doing a qualifying purchase you would soon be back up to £12k (plus bonuses and better interest rate) within around 15 months.

The main downside of the LISA is that the early withdrawal penalty is slightly more than the bonus ie £4000 plus £1000 (25% bonus) = £5000 minus £1250 (25% early withdrawal penalty) = £3,750 so if you go for the LISA you need to be pretty sure you will make a qualifying purchase and are happy to wait at least a year, preferably a bit longer to be in the same position as you already are with the HTB ISA.

But then the LISA has advantages such as the better interest rate, the interest on added bonuses and the ability to keep going in subsequent tax years to earn additional bonuses (although remember property prices tend to rise so the £450k price cap is likely to become more restrictive over the years). If you do use the LISA remember it's the solicitor who must make the penalty free withdrawal not you.

If you are not going to use your full £20k ISA contribution allowance each tax year you might decide to burn a bit of your allowance and just withdraw some to your bank account to recontribute into another ISA as it may be more convenient than a partial transfer.

Johntea

I've opened a Moneybox LISA account, set up a £1 DD from my normal bank then initiated a transfer of £3999 (from 'previous tax years' from my Halifax HTB)

Will that qualify for the £1000 bonus for this tax year once transferred?  And does that then mean I have £16,000 or £20,000 for T212 (or rather £19,400 as I contributed £600 to Halifax this tax year before moving on to T212)

WillPS

Johntea said:

I've opened a Moneybox LISA account, set up a £1 DD from my normal bank then initiated a transfer of £3999 (from 'previous tax years' from my Halifax HTB)

Will that qualify for the £1000 bonus for this tax year once transferred?  And does that then mean I have £16,000 or £20,000 for T212 (or rather £19,400 as I contributed £600 to Halifax this tax year before moving on to T212)

Yepp, you'll see the £1000 bonus added towards the end of the month (or next month) depending when the funds were received, the cutoff is around the 5th each month.

slenderkitten

I actually opted to get rid of my Halifax help to buy ISA it was paying 1.90% at the time, they wouldn't allow me to transfer out to another cash ISA only to another help to buy if I remember correctly so I withdraw in smaller amounts to current account then into my other isa which is double the interest. Help to buy was too limiting I could save far more and have better rerurns elsewhere. I'm too old for Lisa accounts. 

PRAISETHESUN

slenderkitten said:

I actually opted to get rid of my Halifax help to buy ISA it was paying 1.90% at the time, they wouldn't allow me to transfer out to another cash ISA only to another help to buy if I remember correctly so I withdraw in smaller amounts to current account then into my other isa which is double the interest. Help to buy was too limiting I could save far more and have better rerurns elsewhere. I'm too old for Lisa accounts. 

It's interesting you say that as I didn't have any problems transferring my H2B ISA to a cash ISA with a different provider. I had to complete a paper form as the H2B provider wasn't on the list when I tried to do it electronically, but it went smoothly after that. Transferred into YBS if that helps.

eskbanker

slenderkitten said:

they wouldn't allow me to transfer out to another cash ISA only to another help to buy if I remember correctly

I don't think you are remembering correctly, or if you are then that would have justified a complaint, as ISA providers aren't allowed to reject requests to transfer out to other ISAs (unless doing so would breach the terms of the other one, e.g. LISA limits).