Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • htis
    • By htis 10th Feb 19, 7:31 PM
    • 7Posts
    • 0Thanks
    htis
    Transferring HTB ISA to LISA
    • #1
    • 10th Feb 19, 7:31 PM
    Transferring HTB ISA to LISA 10th Feb 19 at 7:31 PM
    Hi,


    This may be pretty obvious but I can't get my head around how this works. I have 8500 in my HTB ISA and want to transfer to a LISA. I know that the maximum pay-in of a LISA per year is 4000. I also know that I can only have 1 ISA per tax year. If I get a LISA, I can transfer in 4000 which leaves me with 4500 in an ISA I'm not able to have. I also know I shouldn't take money out of the ISA or I lose the government payment benefit. So I'm really unsure how I'm supposed to go about swapping from one to the other.


    Thanks for any advice offered!

    Chris
Page 1
    • eskbanker
    • By eskbanker 10th Feb 19, 11:56 PM
    • 9,470 Posts
    • 11,101 Thanks
    eskbanker
    • #2
    • 10th Feb 19, 11:56 PM
    • #2
    • 10th Feb 19, 11:56 PM
    I also know that I can only have 1 ISA per tax year.
    Originally posted by htis
    A misconception, albeit not an uncommon one.

    The actual overall rule is that you can pay new money into one ISA of each type in any given tax year.

    While transfers normally circumvent this by not counting as new money, there is an additional constraint on LISAs that means you can only put 4K into a LISA in a tax year even if you're transferring from a non-lifetime ISA.

    So, in your case you can shift 4K from HTB to LISA by 5 April and another 4K after 6 April, leaving 500 in your HTB that couldn't go into the LISA until April 2020. However, given that LISAs need to be open for a year before (penalty-free) use towards a first property, that's presumably not too much of an issue?
    • htis
    • By htis 11th Feb 19, 2:32 PM
    • 7 Posts
    • 0 Thanks
    htis
    • #3
    • 11th Feb 19, 2:32 PM
    • #3
    • 11th Feb 19, 2:32 PM
    A misconception, albeit not an uncommon one.

    The actual overall rule is that you can pay new money into one ISA of each type in any given tax year.

    While transfers normally circumvent this by not counting as new money, there is an additional constraint on LISAs that means you can only put 4K into a LISA in a tax year even if you're transferring from a non-lifetime ISA.

    So, in your case you can shift 4K from HTB to LISA by 5 April and another 4K after 6 April, leaving 500 in your HTB that couldn't go into the LISA until April 2020. However, given that LISAs need to be open for a year before (penalty-free) use towards a first property, that's presumably not too much of an issue?
    Originally posted by eskbanker

    Thanks for the helpful reply. This leads me to a further problem. If I do as you suggest and put 4000 into a LISA before April 5th and another 4000 in after, this will mean I've reached my limit until April 2020. If I understand this correctly, it would mean I can't put any more money into an ISA until that date, correct? I'm effectively losing out on a lot of the government interest then aren;t I?


    For example by swapping the money over, I'll have 8000 in the LISA by say 8th April, but without the ability to put any more in.


    By not swapping it, I'll still be able to put money into my HTB ISA way after 5th April, thereby earning more government interest.


    Am I missing something here, or does it sound like I shouldn't be swapping it over? Sorry, I'm really having trouble figuring this out, not very good at maths!


    Cheers!
    • masonic
    • By masonic 11th Feb 19, 5:44 PM
    • 11,085 Posts
    • 8,592 Thanks
    masonic
    • #4
    • 11th Feb 19, 5:44 PM
    • #4
    • 11th Feb 19, 5:44 PM
    Thanks for the helpful reply. This leads me to a further problem. If I do as you suggest and put 4000 into a LISA before April 5th and another 4000 in after, this will mean I've reached my limit until April 2020. If I understand this correctly, it would mean I can't put any more money into an ISA until that date, correct? I'm effectively losing out on a lot of the government interest then aren;t I?
    Originally posted by htis
    The 4000 limit applies only to Lifetime ISAs, there is a more general 20,000 limit that applies across ISAs of different types and you won't have reached that limit. So you can continue to fund your HTB ISA after filling your LISA.
    • htis
    • By htis 11th Feb 19, 8:10 PM
    • 7 Posts
    • 0 Thanks
    htis
    • #5
    • 11th Feb 19, 8:10 PM
    • #5
    • 11th Feb 19, 8:10 PM
    Ask eskbanker said:
    The actual overall rule is that you can pay new money into one ISA of each type in any given tax year.

    So the HTB ISA is a different type to the LISA meaning I can pay into both in a given year? When I eventually buy a house though I'll only be able to use the bonus from one of them won't I? So at some point I'll have to put the HTB into the LISA when I plan to buy?
    • htis
    • By htis 11th Feb 19, 9:45 PM
    • 7 Posts
    • 0 Thanks
    htis
    • #6
    • 11th Feb 19, 9:45 PM
    • #6
    • 11th Feb 19, 9:45 PM
    Just to confirm then, this is how I would do it and it would work:


    Now: HTB ISA has 8294. Open LISA and transfer 4000 in from HTB ISA


    6th April 2019: Transfer another 4000


    Save 200 a month into HTB ISA


    6th April 2020: Transfer in the HTB ISA again and top it up to another 4000 = 12,000.


    Just thinking though, if I can only use the 25% government bonus on 1 of them, there's no use in saving 200 a month into a HTB ISA specifically is there? I can just put it into any account and transfer it into the ISA on 6th April 2020 right? The HTB ISA effectively becomes useless once I open the LISA.
    • sully1311
    • By sully1311 11th Feb 19, 9:56 PM
    • 141 Posts
    • 67 Thanks
    sully1311
    • #7
    • 11th Feb 19, 9:56 PM
    • #7
    • 11th Feb 19, 9:56 PM
    Just to confirm then, this is how I would do it and it would work:


    Now: HTB ISA has 8294. Open LISA and transfer 4000 in from HTB ISA


    6th April 2019: Transfer another 4000


    Save 200 a month into HTB ISA


    6th April 2020: Transfer in the HTB ISA again and top it up to another 4000 = 12,000.


    Just thinking though, if I can only use the 25% government bonus on 1 of them, there's no use in saving 200 a month into a HTB ISA specifically is there? I can just put it into any account and transfer it into the ISA on 6th April 2020 right? The HTB ISA effectively becomes useless once I open the LISA.
    Originally posted by htis
    It doesn't become useless if you use your Help to Buy ISA as a regular savings account. The interest on these normally outweigh interest on LISAs. If I was you I would transfer 4k before April 2019, keep building up the money in HTB ISA for the next tax year (as well as utilising other high interest savers) and then transfer another 4k before April 2020. Then either transfer the rest in straight after the new tax year starts in April 2020 for piece of mind or repeat the process until you're ready to buy to gain maximum interest on your savings.
    • htis
    • By htis 11th Feb 19, 9:59 PM
    • 7 Posts
    • 0 Thanks
    htis
    • #8
    • 11th Feb 19, 9:59 PM
    • #8
    • 11th Feb 19, 9:59 PM
    It doesn't become useless if you use your Help to Buy ISA as a regular savings account. The interest on these normally outweigh interest on LISAs. If I was you I would transfer 4k before April 2019, keep building up the money in HTB ISA for the next tax year (as well as utilising other high interest savers) and then transfer another 4k before April 2020. Then either transfer the rest in straight after the new tax year starts in April 2020 for piece of mind or repeat the process until you're ready to buy to gain maximum interest on your savings.
    Originally posted by sully1311

    But the HTB ISA only gives low interest, so wouldn't I be better off saving money in S&S ISA and transferring into the LISA each year? That way I can earn more interest on the money before transferring it into the LISA and getting the 25%? I have to say, I haven't a clue about any of this so I'm trying to muddle my way through and work out the best way to save towards a deposit.
    • eskbanker
    • By eskbanker 12th Feb 19, 1:02 PM
    • 9,470 Posts
    • 11,101 Thanks
    eskbanker
    • #9
    • 12th Feb 19, 1:02 PM
    • #9
    • 12th Feb 19, 1:02 PM
    But the HTB ISA only gives low interest, so wouldn't I be better off saving money in S&S ISA and transferring into the LISA each year? That way I can earn more interest on the money before transferring it into the LISA and getting the 25%? I have to say, I haven't a clue about any of this so I'm trying to muddle my way through and work out the best way to save towards a deposit.
    Originally posted by htis
    HTB ISAs tend to pay better interest than comparable cash deposit accounts, in that you can get 2.5%, although with 200 a month you can beat that in some regular saver accounts.

    Don't go anywhere near S&S ISAs if you're saving for a house - investing should only be considered for long-term (7-10+ years) accumulation, as it's entirely possible that your capital would lose value over shorter timescales, so stick to cash deposits in savings accounts....
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,575Posts Today

7,447Users online

Martin's Twitter