Lifetime ISAs guide

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  • Lolly88
    Lolly88 Posts: 322 Forumite
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    edited 16 October 2017 at 8:08PM
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    1) I think because the interest was paid this tax year it will count to this years contributions as per there terms and conditions, although it is a bit vague

    2) Skipton's official line is that they reserve the right to withdraw the option to transfer in at any point and hope not too but might if there are too many transfers. So it's your gamble how long you leave it for.

    You can't apply for the transfer online, you have to fill out a form and send it via post. The account can be managed online and given the fact that there are few skipton branches i think it unlikely they will require you to bring ID to a branch.

    3) I have no idea, sorry.
    Homeowner
    :j
  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 17 October 2017 at 12:30PM
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    Hi

    1) Interest or growth within ISA wrappers do not count as contributions. Contributions are where you transfer money into the ISA wrapper from your bank account, cash deposit, etc. [Edit: see note below - for HTB transfers both contributions and in year proceeds count towards the LISA limit]

    2) Frankly for a small difference in interest I wouldn't jeopardise the larger LISA bonus or ability to transfer by delaying. We are already in the last 6 months of the tax year. Transfers get delayed for all sorts of stupid reasons. Sometimes it's just both parties waiting on the other.

    3) It is likely that Halifax will close it if you transfer the full balance. HMRC are only allowing historic HTB contributions to LISA transfers this tax year. Although that may change as people have been slow to switch but maybe the government won't want to help those people.

    Basically my suggestion is to get on the LISA bus and stop worrying about the interest difference as it's all marginal compared to the bigger bonus. Although having a 5% regular saver expiring in Jan each year might work.

    Alex
  • Lolly88
    Lolly88 Posts: 322 Forumite
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    Alexland wrote: »
    Hi

    1) Interest or growth within ISA wrappers do not count as contributions. Contributions are where you transfer money into the ISA wrapper from your bank account, cash deposit, etc.

    I don't think that's true in this case it clearly says in the terms and conditions:

    If you continue to pay funds into your Help to Buy ISA after 5 April 2017 these funds, and interest earned, will count towards your £4000 allowance for 2017/2018.

    So therefore since her interest was paid this tax year it will come from the £4000 allowance.
    Homeowner
    :j
  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 16 October 2017 at 10:40PM
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    I have just checked page 141 of the 361 page HMRC guidance notes for ISA managers and actually you are correct any funds in the HTB in in excess of the value at 5th April 2017 will count towards the £4k LISA limit so that includes contributions and proceeds.
  • rachlikeswinter
    rachlikeswinter Posts: 217 Forumite
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    OK thanks both, super helpful. Annoying about the interest part counting as it’s one day out.. but it’s not the end of the world. As an aside to that, how do you know when you’ve reached your 4K allowance each year? I presume there’s something that says ‘you can add £1234.56 more this tax year’ on your skipton account... or would that be far too simple and straightforward? Guess I’ll find out!

    And yes you’re probably right about just switching over to the Lisa sooner rather than later and not worrying about small things but I just can’t get over the paltry 0.5% interest rate ha. Oh well.

    Have worked out it will still take me at least 5 years to even scrape any sort of non-laughable deposit together anyway (yay London) so.. wish me luck :rotfl:
  • eskbanker
    eskbanker Posts: 31,076 Forumite
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    Lolly88 wrote: »
    I don't think that's true in this case it clearly says in the terms and conditions:

    If you continue to pay funds into your Help to Buy ISA after 5 April 2017 these funds, and interest earned, will count towards your £4000 allowance for 2017/2018.

    So therefore since her interest was paid this tax year it will come from the £4000 allowance.
    Alexland wrote: »
    I have just checked page 141 of the 361 page HMRC guidance notes for ISA managers and actually you are correct any funds in the HTB in in excess of the value at 5th April 2017 will count towards the £4k LISA limit so that includes contributions and proceeds.
    ....but a subsequent update in the form of a letter from the Treasury clarified that HTB interest earned up to 5 April 2017 but not actually paid into the account until after that doesn't count towards the 2017/18 £4K LISA limit:
    The amount that can be transferred from a Help to Buy: ISA to a Lifetime LISA in the 201718 tax year without being treated as a contribution to the Lifetime ISA is the value in the Help to Buy: ISA account as at 5 April 2017 plus any interest that has accrued on that amount, but not yet been paid into the Help to Buy: ISA account, as at 5 April 2017.
    so the vast majority (364/365ths) of rachlikeswinter's interest credited in April 2017 won't count towards the 2017/18 £4K LISA limit.
  • Ed-1
    Ed-1 Posts: 3,892 Forumite
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    eskbanker wrote: »
    ....but a subsequent update in the form of a letter from the Treasury clarified that HTB interest earned up to 5 April 2017 but not actually paid into the account until after that doesn't count towards the 2017/18 £4K LISA limit:so the vast majority (364/365ths) of rachlikeswinter's interest credited in April 2017 won't count towards the 2017/18 £4K LISA limit.

    At least it shouldn't by law. Whether it will in practice is another matter...
  • Alexland
    Alexland Posts: 9,653 Forumite
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    I think the best thing to do is perform the transfer and ask your LISA provider to detail the remaining contribution you can make this year and see how they have interpreted these rules.
  • rachlikeswinter
    rachlikeswinter Posts: 217 Forumite
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    Ok interesting. I guess it’s a wait and see scenario? My only question then is how I would find out exactly what allowance I would have if interest is included.. I know it’s only a few pounds/pennies but of course want to fill the £4K to the max.
  • eskbanker
    eskbanker Posts: 31,076 Forumite
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    I'd assume that HTB ISA providers will need to supply a breakdown of interest accrued to 5 April 2017 but unpaid by then, when forwarding funds to the receiving LISA provider, which would then allow the LISA provider to advise you of remaining 2017/18 allowance, but suspect that there won't have been a huge amount of precedent set yet - can anyone who's actually been through this advise?
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