Lifetime ISAs guide

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  • PerfectMess
    PerfectMess Posts: 54
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    Not sure whether I should start a new thread as everyone is talking about buying houses but it's my first post here goes...
    I'm 25 a basic rate taxpayer, likely to stay that way through employment and definitely through retirement. I'm paying into my NHS pension CARE DB scheme so that will put me over the tax free threshold without considering that there will still be a state pension when I come to retire. I have bought a house.
    I have plenty (too much) cash as I only started investing after I bought my house.
    Now I am saving for early retirement/more likely to go part time, date is very flexible who knows what will happen next year so I'm starting now with a view that I can pause payments as and when in the future.
    I started a stakeholder pension, nearly two years ago, now paying in £150/month reluctant to increase (I don't think it's quite what I wanted and I was going to move it but it's doing better than I expected so I'll keep it for now), I also have a S&S ISA ~£500/month now.
    So I'm now looking at LISA as another pot... tax relief same as pension going in but tax free coming out. I have to wait until at least 58? I think for pension so only an extra two years to the LISA and ~state pension age for NHS pension but I will have plenty S&S ISA hopefully to fund any gaps or extra years.
    Does this seem correct? Everyone is saying LISAs are great for houses which I agree but they aren't saying they're good for retirement?
    I think AJ Bell would be a good option for me with their low fees £1.50 to deal so I would be buying and holding it's for the long term in a LISA anyway so invest £4000 wait for bonus and invest £1000+4000 in one transaction and so on keeping some cash to cover fees?
  • PerfectMess
    PerfectMess Posts: 54
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    jimbob0802 wrote: »
    1. I opened up a Stocks and Shares LISA with Nutmeg at the start of the tax year - to 'get the ball rolling', as Martin Lewis put it. I put £100 into it rather than the nominal £1.

    2. When Skipton released their Cash LISA, I opened one up. Soon after, I transferred £3000 of funds from my Nationwide Flexclusive ISA to my Nationwide Flexdirect Current Account. At that point, I paid in £3000 into my Skipton Cash LISA as a Debit Card payment (i.e. from the Flexdirect Current Account).

    That is the position I'm in. My goal all along has been to simply lock away £4000 of my savings into the LISA scheme, as to be eligible for the 25% bonus. As per the advice on MSE, I was going to transfer my Nationwide H2B ISA into a LISA in March of next year, as to keep the bonus I have on that at the moment (currently at £2200 and paying in £200 per month).
    I know this is only my second post but from reading this thread your HTB and LISA contributions this tax year can only equal £4000 so you can't put £4000 (or £3100) into your LISA and 200/month into HTB. Your LISA can only have £4000 - £2400 (12x200) if you were to carry on all HTB payments this tax year.
  • Ed-1
    Ed-1 Posts: 3,867
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    edited 13 July 2017 at 7:21AM
    I know this is only my second post but from reading this thread your HTB and LISA contributions this tax year can only equal £4000 so you can't put £4000 (or £3100) into your LISA and 200/month into HTB. Your LISA can only have £4000 - £2400 (12x200) if you were to carry on all HTB payments this tax year.

    Good point - they'd only be able to transfer a maximum of H2B ISA contributions made before 6th April 2017 + £900 post-6th April contributions - any interest from after 6th April 2017.
  • Ed-1 wrote: »
    This is when you broke the rules. There's no distinction between a stocks and shares LISA and a cash LISA like there is between a stocks and shares ISA and a cash ISA. You can pay into 1 each of the latter but only one LISA (whether it's cash or stocks and shares). You needed to transfer your Nutmeg LISA into Skipton so that you only paid into one LISA this tax year.

    Your second LISA is currently likely to be voided by HMRC at the end of the tax year. To avoid this, transfer the Nutmeg LISA into Skipton.

    Hi Ed....sorry to keep beating on about this, but I trust your knowledge on this.

    With that in mind, would it be more prudent to do this asap, and just get my £4k into the Skipton Cash LISA (preferable I guess, as I'm a low risk sort of guy)?

    Also, do I need to fess up to HMRC, or will they just see what LISA's I have open at the end of the tax year? (Hence, if I close the Nutmeg a/c, I should be okay right?)

    Finally...if I have saved £2400 in my H2B, and transfer it into the LISA in March 2018 (hopefully), does this mean that I only really have to have £1600 in my Cash LISA to ensure the eventuality of me having £4k, and therefore the 25% bonus, plus the full bonus amount on my H2B for this tax year?

    I owe you one for the advice, much appreciated! :beer:
  • Ed-1
    Ed-1 Posts: 3,867
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    jimbob0802 wrote: »
    Hi Ed....sorry to keep beating on about this, but I trust your knowledge on this.

    With that in mind, would it be more prudent to do this asap, and just get my £4k into the Skipton Cash LISA (preferable I guess, as I'm a low risk sort of guy)?

    Also, do I need to fess up to HMRC, or will they just see what LISA's I have open at the end of the tax year? (Hence, if I close the Nutmeg a/c, I should be okay right?)

    Finally...if I have saved £2400 in my H2B, and transfer it into the LISA in March 2018 (hopefully), does this mean that I only really have to have £1600 in my Cash LISA to ensure the eventuality of me having £4k, and therefore the 25% bonus, plus the full bonus amount on my H2B for this tax year?

    I owe you one for the advice, much appreciated! :beer:

    How long have you been paying into your H2B ISA? Anything paid in before 6th April 2017 can be transferred in addition to the £4k LISA limit. Anything paid in from 6th April reduces the amount you can pay into the LISA so if you'll have paid £2,200 into the H2B by next March and you've already paid £3,100 into the LISA this year, you won't be able to transfer all of the H2B ISA across to LISA. If you tried to transfer it all Skipton would likely return the excess to you by cheque or reject the transfer.

    You could start afresh and close both LISAs given there are no withdrawal charges this year but you must close the LISA if you withdraw anything.

    You could then start again (although it would reset the 12 month clock if that's a problem).

    LISAs that have been transferred mid-year aren't reported to HMRC.
  • Ed-1 wrote: »
    How long have you been paying into your H2B ISA? Anything paid in before 6th April 2017 can be transferred in addition to the £4k LISA limit. Anything paid in from 6th April reduces the amount you can pay into the LISA so if you'll have paid £2,200 into the H2B by next March and you've already paid £3,100 into the LISA this year, you won't be able to transfer all of the H2B ISA across to LISA. If you tried to transfer it all Skipton would likely return the excess to you by cheque or reject the transfer.

    You could start afresh and close both LISAs given there are no withdrawal charges this year but you must close the LISA if you withdraw anything.

    You could then start again (although it would reset the 12 month clock if that's a problem).

    LISAs that have been transferred mid-year aren't reported to HMRC.

    Okay. Think I've got it.

    I only had £1600 in the H2B from 2016-17 so I assume from what you're saying, this is the amount I can transfer in above the £4000 LISA limit. (Or alternatively, transfer in the whole £4000 that will be in there (ironically) come March 2018 - assuming that Skipton accepts the transfer (some conjecture about that according to MSE)

    I would prefer to play it safe with my savings so favour the Cash LISA as opposed to the Stocks and Shares LISA. The clock however, is not important seen as there is zero chance I will be buying a property anytime soon (I am 100% certain about this).

    So, think I'll close both LISA's and start again with Skipton by transferring in the H2B money straight away and then topping it up to the...£5600 that I will be able to have in it? (i.e. the £1600 H2B money plus £4000 new LISA money?) Think this is right...right?!
  • Ed-1
    Ed-1 Posts: 3,867
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    jimbob0802 wrote: »
    Okay. Think I've got it.

    I only had £1600 in the H2B from 2016-17 so I assume from what you're saying, this is the amount I can transfer in above the £4000 LISA limit. (Or alternatively, transfer in the whole £4000 that will be in there (ironically) come March 2018 - assuming that Skipton accepts the transfer (some conjecture about that according to MSE)

    I would prefer to play it safe with my savings so favour the Cash LISA as opposed to the Stocks and Shares LISA. The clock however, is not important seen as there is zero chance I will be buying a property anytime soon (I am 100% certain about this).

    So, think I'll close both LISA's and start again with Skipton by transferring in the H2B money straight away and then topping it up to the...£5600 that I will be able to have in it? (i.e. the £1600 H2B money plus £4000 new LISA money?) Think this is right...right?!

    Yes that's a plan :T
  • Mattmuzz
    Mattmuzz Posts: 19
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    Hello,


    Just a quick one..


    I opened the cash LISA in June with Skipton, does the bonus pay on the year anniversary or does it still pay at the end of the tax year?
  • badger09
    badger09 Posts: 11,128
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    Mattmuzz wrote: »
    Hello,


    Just a quick one..


    I opened the cash LISA in June with Skipton, does the bonus pay on the year anniversary or does it still pay at the end of the tax year?

    Late April/early May 2018
  • tim_n
    tim_n Posts: 1,607
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    AJ Bell (You invest) now does a S&S Lisa

    https://www.youinvest.co.uk/lifetime-isa
    Tim
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