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    • ratechaser
    • By ratechaser 17th Oct 19, 7:01 AM
    • 627Posts
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    ratechaser
    Having multiple types of ISA
    • #1
    • 17th Oct 19, 7:01 AM
    Having multiple types of ISA 17th Oct 19 at 7:01 AM
    Morning all,

    My 16 YO daughter currently has about 40k in her junior ISA. Having had 'the discussion' on future financial planning with her, current plan is:

    1) Get a H2B ISA set up ASAP
    2) When she turns 18, convert her JISA into a standard adult ISA
    3) At the same time, set up a LISA for new money.

    Believe that's ok - she can have all 3 types of ISA at that point because the 'regular' ISA would just be a transfer in so not conflict with the new LISA. And understand that for house purchases she could only get the bonus on one account, so either the LISA becomes a long term pension equivalent option or the H2B ISA would forgo its bonus entirely (not the end of the world as it would still be paying 2.5%, so an ok savings option in its own right)

    Does that all make sense?

    Thanks
    RC
Page 1
    • masonic
    • By masonic 17th Oct 19, 6:22 PM
    • 12,438 Posts
    • 10,014 Thanks
    masonic
    • #2
    • 17th Oct 19, 6:22 PM
    • #2
    • 17th Oct 19, 6:22 PM
    The HTB ISA and the adult ISA (if a cash ISA) are ISAs of the same type (cash ISA). A LISA is a different type of ISA (Lifetime ISA) and can be contributed to alongside a cash ISA. The other two types are S&S ISA and IF ISA.

    She must not add new money to (1) and (2) in the same tax year. This may be a problem if, for example, she tops up the JISA in the same tax year she turns 18.

    In terms of running the HTB ISA and LISA in parallel, in most cases it will make sense to use the LISA for a house purchase and the HTB ISA for interest without claiming the bonus.
    Last edited by masonic; 17-10-2019 at 6:26 PM.
    • ratechaser
    • By ratechaser 18th Oct 19, 6:42 PM
    • 627 Posts
    • 533 Thanks
    ratechaser
    • #3
    • 18th Oct 19, 6:42 PM
    • #3
    • 18th Oct 19, 6:42 PM
    The HTB ISA and the adult ISA (if a cash ISA) are ISAs of the same type (cash ISA). A LISA is a different type of ISA (Lifetime ISA) and can be contributed to alongside a cash ISA. The other two types are S&S ISA and IF ISA.

    She must not add new money to (1) and (2) in the same tax year. This may be a problem if, for example, she tops up the JISA in the same tax year she turns 18.

    In terms of running the HTB ISA and LISA in parallel, in most cases it will make sense to use the LISA for a house purchase and the HTB ISA for interest without claiming the bonus.
    Originally posted by masonic
    Thanks, for simplicity the starting point is cash all round. Baby steps... I suspect an IF ISA might be a step too far for an 18 YO!

    So the conflict between 1 and 2 can be managed because the Nationwide's H2B ISA allows additional contributions up to 20k, beyond the H2B element. Not that she's likely to have that much new money to put in - contributions from the bank of mum&dad will not go on forever!

    Tend to agree on using the H2B as just a savings account - they have better rates than LISAs, whereas a LISA will allow a bonus to build up faster and has a higher FTB purchase threshold.

    Of course, she could hold it till retirement to get the bonus there but the chances of it not getting screwed over in that 33 year period by successive governments tax tinkering.... well...
    • masonic
    • By masonic 18th Oct 19, 8:18 PM
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    masonic
    • #4
    • 18th Oct 19, 8:18 PM
    • #4
    • 18th Oct 19, 8:18 PM
    Yes, if she wants to use the rest of her allowance, then a split-ISA like that offered by Nationwide would be a good solution.

    However, rates tend to be better outside of ISAs so for savings that will ultimately go towards the house purchase (where long-term tax free status is unimportant) she's best going with the best available net rate, wherever that can be found, taking into account the Personal Savings Allowance.

    There's also nothing to stop her using a LISA for the initial house purchase and then transferring it to a S&S provider afterwards to save into for retirement.
    Last edited by masonic; 18-10-2019 at 8:20 PM.
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