Lifetime ISAs guide

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  • pphillips
    pphillips Posts: 1,631
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    Foresters Friendly Society are also doing Lifetime ISA's

    http://www.forestersfriendlysociety.co.uk/saving-investing/lifetime-isa/at-a-glance/
  • Hi people of MSE

    I was hoping someone could tell me how you determine what year your ISA belongs to? I currently have one with Nationwide (previously HSBC) but don't know year it is from.

    In other words, say you had 5 isas all opened in different years and maxed out when opened and currently sitting in different banks, how exactly do you tell what year an isa is from?

    Many thanks
  • Alexland
    Alexland Posts: 9,653
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    Hi

    Look at the statements... But why does it matter what year they are from the key question is whether you have made contributions in the current tax year as that will limit additional contributions during this tax year and confirm you are within the rules of only having 1 of each ISA type within each year.

    Alex
  • pphillips
    pphillips Posts: 1,631
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    Hi people of MSE

    I was hoping someone could tell me how you determine what year your ISA belongs to? I currently have one with Nationwide (previously HSBC) but don't know year it is from.

    In other words, say you had 5 isas all opened in different years and maxed out when opened and currently sitting in different banks, how exactly do you tell what year an isa is from?

    Many thanks

    Simple, if you did not put money into the ISAs after 5th April 2017 then you know they belong to a previous tax year and you still have your full ISA allowance to use up this tax year (6th April 2017-5th April 2018). If you didn't use your full ISA allowances from previous years, then unfortunately you will have lost them forever.
  • Jimba
    Jimba Posts: 1
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    Apologies in advance if posting on the wrong thread or in the wrong place but im new to the forum!
    Quick question: I read somewhere that you can't open a LISA if you have used a cash ISA in the same tax year. Is this correct? If so, can I withdraw money from a cash ISA and still pay into a LISA in the same tax year (provided I don't make any payments 'into the Cash ISA)?

    Thanks in advance if someone can clarify
  • Boosh
    Boosh Posts: 9
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    Couple of questions I'm trying to get my head around.

    1) The main article says you shouldn't start putting money into LISAs now as the interest rate is comparatively poor, but rather you should put 1p in so the time starts counting down. However, isn't the obvious benefit of paying in from the start that you'll have £4,000 more in at the end of Year One, and thus an extra £1,000 on your deposit than you would have had otherwise? Then by the end of Year 2 you'd have £8000 + £2000? Yet if it's left in another account and transferred over, you'll be a year behind on the amount extra you get on the deposit?

    2) With the Stocks and Shares LISAs, how does it work with payments received for your shares going up in value? Does 25% of those value increases go to the deposit scheme as well? For example, if I invest £1000 in a S and S LISA and the shares double in value to £2000, am I entitled to £500 extra from the government? And does the opposite happen if my shares decrease in value?

    Sorry the Qs are a little rambly. Just a bit confused on those two issues. Any help much appreciated.
  • badger09
    badger09 Posts: 11,128
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    Jimba wrote: »
    Apologies in advance if posting on the wrong thread or in the wrong place but im new to the forum!
    Quick question: I read somewhere that you can't open a LISA if you have used a cash ISA in the same tax year. Is this correct? If so, can I withdraw money from a cash ISA and still pay into a LISA in the same tax year (provided I don't make any payments 'into the Cash ISA)?

    Thanks in advance if someone can clarify

    No, that's not correct. A LISA is a totally separate category of ISA.

    So you can save in a LISA and a Cash or HTB, and S&S, and an IF ISA all in the same tax year.
  • badger09
    badger09 Posts: 11,128
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    Boosh wrote: »
    Couple of questions I'm trying to get my head around.

    1) The main article says you shouldn't start putting money into LISAs now as the interest rate is comparatively poor, but rather you should put 1p in so the time starts counting down. However, isn't the obvious benefit of paying in from the start that you'll have £4,000 more in at the end of Year One, and thus an extra £1,000 on your deposit than you would have had otherwise? Then by the end of Year 2 you'd have £8000 + £2000? Yet if it's left in another account and transferred over, you'll be a year behind on the amount extra you get on the deposit?

    2) With the Stocks and Shares LISAs, how does it work with payments received for your shares going up in value? Does 25% of those value increases go to the deposit scheme as well? For example, if I invest £1000 in a S and S LISA and the shares double in value to £2000, am I entitled to £500 extra from the government? And does the opposite happen if my shares decrease in value?

    Sorry the Qs are a little rambly. Just a bit confused on those two issues. Any help much appreciated.

    1) I suspect the minimum you can pay in will be £1. Because Cash LISA pays such low interest, the idea is to open one with say £1 to start the clock ticking. Then towards the end of March (before 5th April) pay in another £3999 or whatever you have up to that amount, which you've been saving elsewhere at higher rates. Then by the end of May you'll get your 25% bonus. If you can pay in another £4k on or shortly after 6th April 2017, you'll get the 25% bonus on £8k at the end of May.

    2) The bonus relates to the amount you have paid in so is not affected by whether the value of your investments goes up or down.
  • If i get this correctly, only money saved in a H2B ISA prior to 6th April 2017 doesn't count to the LISA £4000 limit if you transfer before 6th April 2018?

    I say this because my plan initiall was to;

    open a LISA account with £1.
    Transfer £3999 from a pre 2017/18 cash ISA to the LISA to max it out.
    If the £3999 does not count to my £4000 LISA limit, then add another £4000 prior to 5th April 2018 to get a bonus of 25% on £8000.

    Is this valid?
  • eskbanker
    eskbanker Posts: 30,401
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    If i get this correctly, only money saved in a H2B ISA prior to 6th April 2017 doesn't count to the LISA £4000 limit if you transfer before 6th April 2018?

    I say this because my plan initiall was to;

    open a LISA account with £1.
    Transfer £3999 from a pre 2017/18 cash ISA to the LISA to max it out.
    If the £3999 does not count to my £4000 LISA limit, then add another £4000 prior to 5th April 2018 to get a bonus of 25% on £8000.

    Is this valid?
    As per your first sentence, it's only valid if the £3999 comes specifically from pre-2017/18 contributions to a HTB ISA (do you actually have one?).

    If it doesn't, you can transfer the £3999 from somewhere else to give a LISA balance of £4000 by 5 April 2018 and then add another £4000 on 6 April 2018 to achieve your £8000 balance, with the first £1000 bonus paid around the end of April 2018 and then another £1000 bonus paid around the end of May 2018.
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