ISA transfer from cash ISA (prior year contributions) to Lifetime ISA

intalex

Just wondered whether one is allowed to re-purpose prior year easy access cash ISA funds into a Lifetime ISA (max £4k) in the current year, whilst still retaining the full £20k current year allowance to contribute into a different cash / S&S ISA?

I specifically want to dump the full £20k allowance into a multi-year fix with Shawbrook, and since they only allow current year contributions each year and don't allow any transfers-in (after initial window), I have been contributing £16k into Shawbrook + £4k in a Lifetime ISA whilst still holding a pot of easy access cash ISA without as good a return.

I'd rather do the above and gradually "upgrade" the return on the easy access cash ISA pot, but just wanted to understand how the rules would interpret the transfer of prior year cash ISA funds into a Lifetime ISA in terms of current year allowance usage.

masonic

Yes you can. The transfer uses your £4k LISA allowance but not your £20k annual allowance.

epm-84

AJ Bell say the following, if it helps:

Transfer from a Cash ISA to a Lifetime ISA

You can transfer cash from a Cash ISA to Lifetime ISA. Please note the following:

• Your transferred cash will qualify for the government bonus.
• Make sure you don’t exceed the £4,000 yearly limit, since it counts as a Lifetime ISA payment.
• As the payments you’ve made into your Cash ISA already count in your overall ISA allowance of £20,000, the transfer won’t change the amount you have left.

intalex

Thank you both, I've sadly already subscribed direct cash into my Lifetime ISA and bonus has arrived too (as I did the previous 2 tax years), but I will start redirecting my "leftover" cash ISA (just over £11k) from the next tax year and hopefully transfer it all across over the next 3 tax years.

I wish I'd thought of this sooner, would have cleared the "leftover" cash ISA by now and would have had more in my Shawbrook 5.22% AER… hopefully the scenario and option will help someone else…