LISA Transfer Question

Hi all
I opened a Skipton cash LISA towards the end of last year just so that I didn't lose the allowance. However I am planning to use the money for later life so basically want to transfer the money to a HL S&S LISA. If I open a HL LISA now and invested £4000 today (new contributions) would I still be able to transfer my Cash LISA of £5000 (contribution plus bonus for 1718 tax year) from Skipton to HL? I have read that transferring a LISA to a different provider does affect your annual LISA contributions but not your annual ISA contributions.
Thanks
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  • eskbanker
    eskbanker Posts: 30,415
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    edited 11 May 2018 at 3:46PM
    I opened a Skipton cash LISA towards the end of last year just so that I didn't lose the allowance. However I am planning to use the money for later life so basically want to transfer the money to a HL S&S LISA. If I open a HL LISA now and invested £4000 today (new contributions) would I still be able to transfer my Cash LISA of £5000 (contribution plus bonus for 1718 tax year) from Skipton to HL?
    [STRIKE]Yes[/STRIKE]. Oops, no! As per subsequent post, HL don't accept LISA transfers so the issue of transferred balances versus annual limits is moot.
    I have read that transferring a LISA to a different provider does affect your annual LISA contributions but not your annual ISA contributions.
    Wherever you read that was wrong then!

    The official rules at https://www.gov.uk/guidance/lifetime-isas-for-isa-managers are clear:
    The following are not current year payments [i.e. limited to the £4K annual LISA allowance]:
    • [...]
    • cash or investments transferred to a Lifetime ISA from another Lifetime ISA
    Lifetime ISAs can be transferred between Lifetime ISA managers without incurring a withdrawal charge. There is no limit on the amount transferred. The normal ISA transfer rule applies and any current year payments must be transferred in full to the new Lifetime ISA manager.
  • toothdoctor
    toothdoctor Posts: 87
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    Many thanks for your reply eskbanker. That link provides me with a lot of information. I thought the same as you but received this reply from HL when I asked them the question

    `Thank you for your enquiry regarding the Vantage Lifetime ISA.

    You are able to open a 2018/19 Lifetime ISA with Hargreaves Lansdown, however under HMRC regulation you can only subscribe to one Lifetime ISA per tax year. As a result you will not be able to contribute to your Lifetime ISA with Skipton for this tax year.

    The subscription limit of £4,000 is included within the overall ISA subscription allowance, currently £20,000 per annum. This means that you could subscribe £4,000 to a Lifetime ISA and a further £16,000 to a Cash ISA or a Stocks & Shares ISA during the 2019/20 tax year if you so wish.

    Unfortunately you are unable to transfer your existing Lifetime ISA in to Hargreaves Lansdown, and so you would have to keep your Lifetime ISAs with separate providers.


    That last paragraph says that I can't transfer which contradicts what is said in the info for isa managers. It looks like HL have given me the incorrect information which isn't great coming from one of the largest investment platform.
  • AirlieBird
    AirlieBird Posts: 1,046 Forumite
    What HL are telling you in a not very good way is that they are not currently accepting transfers in of a Lifetime ISA to their Lifetime ISA. You would need to look to transfer to another investment platform that was accepting transfers of Lifetime ISAs.
    Did you really mean to put loose?
    Lose: no longer possess, not to retain, unable to find
    Loose: not firmly or tightly fixed in place
  • toothdoctor
    toothdoctor Posts: 87
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    Thanks AirlieBird, that makes perfect sense. Although the Lisa rules state that you can transfer from one Lisa to another like normal Isas the Isa managers are under no obligation to accept transfers. However I have read on these forums that people have transferred nutmeg to HL. I assume they transferred normal is as and not lisas. Thanks again
  • Alexland
    Alexland Posts: 9,653
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    edited 11 May 2018 at 7:50PM
    Yes we transferred our LISAs from Nutmeg to HL however that was before HL decided to stop accepting LISA transfers. Your best option is probably to open a LISA with AJ Bell YouInvest for this year's LISA contribution and ask them to transfer in your £5k Skipton LISA from last year.

    AJ Bell have a cheaper 0.25% platform fee (versus 0.45% for HL) but charge £1.50 per fund trade so you want to keep the trade volumes to a minimum.

    The main reason we chose HL is that I already have money in my Halifax SIPP administered by AJ Bell so wanted to spread accounts across multiple financial institutions to reduce exposure. Also with the discount that HL achieve on some fund manager OCFs it works out about the same price on AJ Bell in total.

    I estimate that if we can contribute £4k per year into LISAs starting in our mid 30s until we are age 50 then with the bonuses and with modest growth above inflation that should grow into pots at age 60 worth circa £100k to £150k in today money. However the rules will probably change along the way...

    Alex.
  • toothdoctor
    toothdoctor Posts: 87
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    Thanks. Was considering AJ Bell but put off as I heard that they collect there fees via selling off some of your investments so in effect I couldn't invest the full £4000 (£8000 for me as I am using my wifes allowance as well). With hl I think you can add cash to a separate account that they take the fees from. considering the blackrock fund which is discounted on hl but this saving is eliminated as aj bell have lower platform fee
  • Alexland
    Alexland Posts: 9,653
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    Yes with HL you can pay platform fees via a separate Fund & Share account however that account will eventually have a closure fee and I prefer paying out of the LISA cash balance as thats less money tied up until 60.

    Either way for your position HL isn't an option for your Skipton transfer so you might as well go AJ Bell as the differences are both marginal and debatable.

    Alex
  • toothdoctor
    toothdoctor Posts: 87
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    I see what you are saying but the closure fee is only £25+ Vat i.e.£30 I am sure that the growth of the funds over the next 15-20 Years (I am in my 30's) will make this irrelevant (correct me if I am wrong). However you are quite right I can't transfer my Skipton LISA to them so I have to decide whether to keep my skipton Lisa (£10,000 myself & wives) earning 0.75% and open a HL Isa and contribute future tax year allowances to that for the foreseeable future or transfer my Skipton to AJ Bell and contribute to that. I appreciate you taking the time to reply, I have learnt a lot
  • Alexland
    Alexland Posts: 9,653
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    edited 11 May 2018 at 7:31PM
    Well yes you would get a bit more growth within the LISA if you paid your fees outside the account however if you pay the fees from within the account then the money you would have otherwise paid the fees outside the account could be invested in a normal S&S ISA and produce similar growth outside the account except with the benefit that the money would not be tied up to 60.

    I have previously been a direct customer of AJ Bell YouInvest (for my SIPP before I transferred it to Halifax SD administered by AJ Bell for lower fees on large fund holdings) and they do a fairly good job. You need to ensure there is enough cash in the LISA to pay the fees or they charge a fee if they have to sell holdings to pay fees.

    It's really not worth leaving last year's £5ks in a below inflation Skipton account for 20+ years in order to progress your future contributions with HL. The differences between HL and AJ Bell are marginal.

    Alex.
  • toothdoctor
    toothdoctor Posts: 87
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    Thank you Alexland. I think I will look at AJ bell and see how all the fees stack up. I was thinking of making a regular contribution monthly to benefit from cost pound averaging but may look at investing every 2-3 months to reduce costs albeit only a few quid. You are write leaving 10k ( my wife and I) in a below inflation account is not good
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