Lifetime ISAs guide
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Yes, they (not you, they need to do all this themselves) can transfer from HTB to LISA anytime - the transitional arrangement for this tax year relates solely to transferring older HTB funds into a LISA without counting towards the £4K annual LISA allowance. Transfers of HTBs to LISAs in subsequent years are possible but are treated as current year subscriptions to the LISAs and are therefore capped at the annual allowance of £4K.I have twin boys who have just turned 16 and an 18 year old. I would like to save for their first houses. where we live this will be more than the £250,000 limit so a lisa will be better but you have to be 18 for a lisa . I want to save exactly the same for all of them. so can I open them all a help to buy isa now and transfer all 3 of them to a lifetime isa in 2 years time when they are all 18 or over? the only info I can find is transferring a help to buy isa to life time isa by April next year but i need to wait till May 2019 to transfer because of the age constraints is still possible to swap after 2 years.
The official version is at section 9B.17 of https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/603261/ISA_Lifetime_ISA.pdf
Incidentally, the government documentation on HTB starting age is contradictory! According to the FAQ they can be opened by "Anyone who is over 16" but the full scheme rules clarify "16 years of age or over".0 -
It's impractical to work out what's best for you based on that information as there are too many unknown variables - all the relevant lump sums and interest rates need to be factored in, as would the length of time you're planning to save.CatGilmurray wrote: »Obvious question but I can't find an answer and I'm in a quandry as to whether to save in a (cash) Lifetime Isa or Help to Buy.. There are reports that with the interest rate being so poor in a Lifetime Isa, despite the fact you can put bigger lump sums in than with a Help to Buy, you would still eventually lose out compared to the H2B with biggest ineterst rates. Is this true? I would have enough for a healthy deposit for my first home, so I'm not too bothered about not being able to use the H2B for that, and I'm looking a couple of years down the line, so I'm not bothered about the money being held in the Lifetime Isa for a year either. My problem is working out whether my money would be better off in a H2B where you can put less in, or a Lifetime Isa where you can save more but have a very low interest rate. I have a poorly paid job, but savings, some of which are in accounts that have good interest rates, up to a limit, and I want to save the rest in one of theses. Can anyone advise me??
HTBs do indeed pay better interest than the only cash LISA on the market so far, but as you say the contribution caps differ and so the 25% of the larger LISA amount is likely to be worth having, dependent obviously on what that money would otherwise be earning.0 -
It's impractical to work out what's best for you based on that information as there are too many unknown variables - all the relevant lump sums and interest rates need to be factored in, as would the length of time you're planning to save.
HTBs do indeed pay better interest than the only cash LISA on the market so far, but as you say the contribution caps differ and so the 25% of the larger LISA amount is likely to be worth having, dependent obviously on what that money would otherwise be earning.
Thanks, I guess I'll have to get my calculator out! I just don't want to make a mistake when certain newspapers and warning against the Lifetime Isa, or saying it's not what it's cracked up to be. One even said that due to it's poor interest rate even if you maxed it out on all the money you can potentially put into it, you'd still be losing money compared to a H2B with good interest rate...0 -
The thing that makes LISA potentially more attractive is that it has a cap of 4k, while HTB is only 2.4k, which means the government bonus on LISA can be more. The interest rates for LISA is indeed less, but if you are able to save more than 2,400 a year (especially if you're going to max it out at 4k), the additional bonus might make it more attractive than HTB.CatGilmurray wrote: »Thanks, I guess I'll have to get my calculator out! I just don't want to make a mistake when certain newspapers and warning against the Lifetime Isa, or saying it's not what it's cracked up to be. One even said that due to it's poor interest rate even if you maxed it out on all the money you can potentially put into it, you'd still be losing money compared to a H2B with good interest rate...0 -
Any thoughts on this? Just to clarify, I am not planning on moving money into Nutmeg until just before the end of the year, so it won't sit there long, and if I decided to hold off on buying, I might then see whether there are cash alternatives available...I have an HTB that I am still paying into and opened a 100 Nutmeg LISA in April. I'm planning to buy in late 2018 / early 2019.
I have intended to switch to a cash LISA when it becomes available, but seeing how low the Skipton rate is made me question that. Is there a good reason NOT to stay with Nutmeg, transfer in my HTB in March 2018 and use it when bonuses hit?
I know the S&S are more volatile than cash, but with inflation as it is, Skipton's 0.5% is a losing game. I picked the lowest risk profile on Nutmeg, so I am thinking that in the worst case, I will lose a little bit, but potentially can gain a bit more - but overall the swing in either direction won't be much so why bother with switching? Am I missing something?0 -
Hi,
so grateful to have this site, and Martin's video has answered all of my HTB ISA vs LISA questions very well - but not all!
I'm looking into getting a cash LISA and living in the south east with its high property prices it's a no-brainer for me. However, I've got a HTB ISA running for just over 2 years now which pays a very good 4% interest. Because of that, I have not much desire to "transfer" but rather keep it running as a pure savings ISA for now. Instead, I'd be looking into paying the LISA from other sources, e.g. a matured regular saver.
I know that I won't be able to transfer the HTB ISA to the LISA if I don't do it within one year, but I don't have any issue with that especially as I can pay into a LISA much more quickly. I know I have to work out when I would be likely buying, but the LISA bonus would "overtake" my HTB ISA bonus very quickly.
My questions are:
- Is there any reason why I couldn't keep my HTB ISA open and use it to save until I buy a property, but instead feed the LISA with cash from elsewhere?
- Given that that the HTB ISA is an ISA, I'm assuming that interest doesn't contribute to the Personal Savings Allowance, correct?
- Does the timing of paying into the LISA affect the annual bonus other than that it has to be within the same tax year?
- Is the LISA bonus only paid on "complete" tax years? For instance, if I buy a house in February do I get any kind of bonus for that year at all?
Thanks!0 -
forethugel wrote: »Hi,
so grateful to have this site, and Martin's video has answered all of my HTB ISA vs LISA questions very well - but not all!
I'm looking into getting a cash LISA and living in the south east with its high property prices it's a no-brainer for me. However, I've got a HTB ISA running for just over 2 years now which pays a very good 4% interest. Because of that, I have not much desire to "transfer" but rather keep it running as a pure savings ISA for now. Instead, I'd be looking into paying the LISA from other sources, e.g. a matured regular saver.
I know that I won't be able to transfer the HTB ISA to the LISA if I don't do it within one year, but I don't have any issue with that especially as I can pay into a LISA much more quickly. I know I have to work out when I would be likely buying, but the LISA bonus would "overtake" my HTB ISA bonus very quickly.
My questions are:
- Is there any reason why I couldn't keep my HTB ISA open and use it to save until I buy a property, but instead feed the LISA with cash from elsewhere?
- Given that that the HTB ISA is an ISA, I'm assuming that interest doesn't contribute to the Personal Savings Allowance, correct?
- Does the timing of paying into the LISA affect the annual bonus other than that it has to be within the same tax year?
- Is the LISA bonus only paid on "complete" tax years? For instance, if I buy a house in February do I get any kind of bonus for that year at all?
Thanks!
You can transfer part of your H2B ISA - you don't have to transfer it all. If you only transfer contributions that were made up to 5th April 2017 across to LISA you can then add £4,000 on top and still keep paying into your H2B ISA.
Yes - interest from any type of ISA doesn't count towards your PSA.
Bonuses will be paid each month from April 2018 so the earlier you contribute from then the earlier you'll get your bonus.0 -
Hi, 1st post and a brief question please -
I assume the 25% bonus is not treated as interest earned as far as tax liability is concerned ?
Thanks0 -
It's an ISA so there is no tax liability!White_Bear wrote: »Hi, 1st post and a brief question please -
I assume the 25% bonus is not treated as interest earned as far as tax liability is concerned ?
Thanks0 -
Can you not have both a lifetime isa and a help to buy isa?0
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