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  • FIRST POST
    • MSE Helen Saxon
    • By MSE Helen Saxon 16th Mar 16, 5:06 PM
    • 75Posts
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    MSE Helen Saxon
    Lifetime ISAs guide
    • #1
    • 16th Mar 16, 5:06 PM
    Lifetime ISAs guide 16th Mar 16 at 5:06 PM
    Hi!

    This is the discussion thread for the



    Click reply below to discuss. If you haven't already, join the forum to reply.


    Thanks folks,
    Last edited by MSE Andrea; 14-05-2018 at 1:33 PM.
Page 72
    • NevvyC
    • By NevvyC 2nd Mar 18, 3:56 PM
    • 60 Posts
    • 3 Thanks
    NevvyC
    It probably does in practice but interest wouldn't count as a current year ISA subscription anyway (even if it did count as a LISA subscription). Interest earned within an ISA wrapper can never count as an ISA subscription.
    Originally posted by Ed-1

    Is there any way to get 100% clarification on this ? As there has been varying opinions that contradict each other on this thread...

    I'm only looking at about 25 interest over the course of the 17/18 tax year from my H2B but was told by a Skipton rep that this would count towards (ie. 'Eat-up') some of my 17/18 4K Max LISA limit. So I likely wouldn't risk breaching this limit for the sake of 25.

    However, this would mean that my bonus would then no longer be 1K (if I deposit the max 4K minus my H2B interest earned this tax year...) ; so then I'm looking at missing out on more & more, fortunately it's only small amounts in my case.... So like I say, may err on the side of caution for the sake of the benefits.

    Thanks in advance for any light shed !
    • Somerset La La La
    • By Somerset La La La 4th Mar 18, 11:11 AM
    • 537 Posts
    • 168 Thanks
    Somerset La La La
    I did get told the same as you NevvyC - that current years subscriptions PLUS INTEREST CREDITED reduce what you can pay into the LISA.

    In practice, they don't seem to be applying it. I've asked over the phone for my limit, and it matches what it lets me deposit online - 3,500 is blocked as over limit - I'm still allowed to contribute 3,499 exactly before the end of the tax year.

    My contributions this year have been 501 (1 Skipton, 400 HTB ISA, 100 Nutmeg Investment LISA), but I've had about 7 interest/investment income.

    So going by what they told me, I actually only have something like 3492 remaining - but Skipton's call centre and their website seem to tell me otherwise! As 3,500 is blocked, they clearly know I've made 501 of deposits - even though they received something like 101 from Nutmeg and an odd amount from the H2B ISA (including prior year subscriptions).

    Also if investment had been in something that had rocketed in value, deducting the interest/investment income analogy that Skipton are saying would mean you breach the limit anyway. If I'd stuck 3,500 in Nutmeg Investment ONLY, that had then grown to 4,500... that's just good planning/investing on my side, I should still be allowed my 500 extra in.

    At the end of the day they're the financial institution not you - IMO ask them what your remaining limit is and go by that. If it's wrong, they should take the rap from HMRC not us!
    • Ed-1
    • By Ed-1 4th Mar 18, 11:22 AM
    • 2,204 Posts
    • 1,178 Thanks
    Ed-1
    I did get told the same as you NevvyC - that current years subscriptions PLUS INTEREST CREDITED reduce what you can pay into the LISA.

    In practice, they don't seem to be applying it. I've asked over the phone for my limit, and it matches what it lets me deposit online - 3,500 is blocked as over limit - I'm still allowed to contribute 3,499 exactly before the end of the tax year.

    My contributions this year have been 501 (1 Skipton, 400 HTB ISA, 100 Nutmeg Investment LISA), but I've had about 7 interest/investment income.

    So going by what they told me, I actually only have something like 3492 remaining - but Skipton's call centre and their website seem to tell me otherwise! As 3,500 is blocked, they clearly know I've made 501 of deposits - even though they received something like 101 from Nutmeg and an odd amount from the H2B ISA (including prior year subscriptions).

    Also if investment had been in something that had rocketed in value, deducting the interest/investment income analogy that Skipton are saying would mean you breach the limit anyway. If I'd stuck 3,500 in Nutmeg Investment ONLY, that had then grown to 4,500... that's just good planning/investing on my side, I should still be allowed my 500 extra in.

    At the end of the day they're the financial institution not you - IMO ask them what your remaining limit is and go by that. If it's wrong, they should take the rap from HMRC not us!
    Originally posted by Somerset La La La
    Interest accrued within a LISA obviously doesn't count against the limit. It's the one-off transfer from a H2B ISA where there's ambiguity. But after this tax year that will be gone - all money transferred into a LISA from a non-LISA will count against the limit.
    • Warren1989
    • By Warren1989 4th Mar 18, 7:25 PM
    • 29 Posts
    • 2 Thanks
    Warren1989
    I put 4000 into a LISA in April last year, it is now worth 4200. I wish to remove it from the LISA wrapper and put it into a normal ISA wrapper.

    Can I transfer the LISA to my ISA provider with the 200 included or do I cash the LISA out to my bank and then deposit 4000 into the ISA? It looks like the ISA provider won't let me add 4200 as it says I only have 4000 allowance remaining (although I have used this on another provider for the LISA).

    Thanks.

    Edit: The provider I have the ISA with don't offer a LISA and I want the LISA to lose it's LISA wrapper and become a standard ISA.
    Last edited by Warren1989; 04-03-2018 at 7:39 PM.
    • Alexland
    • By Alexland 4th Mar 18, 7:56 PM
    • 2,389 Posts
    • 1,791 Thanks
    Alexland
    In theory you should be able to ask your other ISA provider to transfer the whole LISA into your ISA. However they may not have processes to do this.

    If they don't do this by the end of this tax year on 5th April then the LISA withdrawal penalty would apply and get deducted from the transfer value.

    The other option is to withdraw the balance and accept the loss of 4k contribution allowance for this tax year.
    Last edited by Alexland; 04-03-2018 at 7:59 PM.
    • Warren1989
    • By Warren1989 5th Mar 18, 9:17 AM
    • 29 Posts
    • 2 Thanks
    Warren1989
    In theory you should be able to ask your other ISA provider to transfer the whole LISA into your ISA. However they may not have processes to do this.

    If they don't do this by the end of this tax year on 5th April then the LISA withdrawal penalty would apply and get deducted from the transfer value.

    The other option is to withdraw the balance and accept the loss of 4k contribution allowance for this tax year.
    Originally posted by Alexland
    Thanks - and in reality a transfer can take up to 6 weeks (I think) so good chance it won't be completed before that date?

    I thought the ISA allowances were flexible now, so you can withdraw the 4k, then add it back in, so long as it is within the same tax year? So I could withdraw the 4k to bank, then just add it back in (but to the ISA account rather than the LISA account?
    • eskbanker
    • By eskbanker 5th Mar 18, 12:53 PM
    • 7,168 Posts
    • 7,618 Thanks
    eskbanker
    I thought the ISA allowances were flexible now, so you can withdraw the 4k, then add it back in, so long as it is within the same tax year? So I could withdraw the 4k to bank, then just add it back in (but to the ISA account rather than the LISA account?
    Originally posted by Warren1989
    No, flexibility applies to specific products rather than allowances, and if you have a flexible ISA then that gives you the right to withdraw funds and put them back into the same product before the end of the tax year, without it affecting the annual allowance.

    It'll probably be easier to help if you say exactly which products you have with which providers, but further details on the principle of flexible ISAs are shown at https://www.moneysavingexpert.com/savings/flexible-ISAs.
    • Warren1989
    • By Warren1989 5th Mar 18, 1:22 PM
    • 29 Posts
    • 2 Thanks
    Warren1989
    No, flexibility applies to specific products rather than allowances, and if you have a flexible ISA then that gives you the right to withdraw funds and put them back into the same product before the end of the tax year, without it affecting the annual allowance.

    It'll probably be easier to help if you say exactly which products you have with which providers, but further details on the principle of flexible ISAs are shown at https://www.moneysavingexpert.com/savings/flexible-ISAs.
    Originally posted by eskbanker
    Damn.

    The LISA is with Hargreaves Lansdown.

    I currently hold a regular ISA with iWeb and also Fidelity.

    Maybe if I phone HL and ask them to transfer the LISA into a regular ISA? I could then get this done before the end of the tax year? Then potentially transfer over to Fidelity.
    • eskbanker
    • By eskbanker 5th Mar 18, 1:37 PM
    • 7,168 Posts
    • 7,618 Thanks
    eskbanker
    Damn.

    The LISA is with Hargreaves Lansdown.

    I currently hold a regular ISA with iWeb and also Fidelity.

    Maybe if I phone HL and ask them to transfer the LISA into a regular ISA? I could then get this done before the end of the tax year? Then potentially transfer over to Fidelity.
    Originally posted by Warren1989
    Have you paid any 2017/18 money into S&S ISAs at either iWeb or Fidelity? Given the HMRC rules about keeping current year contributions together for each type of ISA, I believe you'd fall foul of these if you ended the tax year with some 2017/18 money in a HL S&S ISA and other 2017/18 money in an S&S ISA with one of the others.

    Sounds like it would be worth asking whichever one of iWeb or Fidelity holds your 2017/18 contributions if they can transfer in from a LISA at HL and, as per Alexland's post, if they're able to do so before the end of the tax year in a month's time....
    • NevvyC
    • By NevvyC 5th Mar 18, 1:56 PM
    • 60 Posts
    • 3 Thanks
    NevvyC
    I did get told the same as you NevvyC - that current years subscriptions PLUS INTEREST CREDITED reduce what you can pay into the LISA.

    In practice, they don't seem to be applying it. I've asked over the phone for my limit, and it matches what it lets me deposit online - 3,500 is blocked as over limit - I'm still allowed to contribute 3,499 exactly before the end of the tax year.

    My contributions this year have been 501 (1 Skipton, 400 HTB ISA, 100 Nutmeg Investment LISA), but I've had about 7 interest/investment income.

    So going by what they told me, I actually only have something like 3492 remaining - but Skipton's call centre and their website seem to tell me otherwise! As 3,500 is blocked, they clearly know I've made 501 of deposits - even though they received something like 101 from Nutmeg and an odd amount from the H2B ISA (including prior year subscriptions).

    Also if investment had been in something that had rocketed in value, deducting the interest/investment income analogy that Skipton are saying would mean you breach the limit anyway. If I'd stuck 3,500 in Nutmeg Investment ONLY, that had then grown to 4,500... that's just good planning/investing on my side, I should still be allowed my 500 extra in.

    At the end of the day they're the financial institution not you - IMO ask them what your remaining limit is and go by that. If it's wrong, they should take the rap from HMRC not us!
    Originally posted by Somerset La La La

    Normally I would agreed with you 100% and fight the banks/building societies tooth&nail to the ends of the Earth... But that would be for smaller amounts and where there's less risk or less at stake to lose ; with such a hefty bonus & generous product I think I'll play it on the safe side.

    Whilst you make good points ; for example, if your S&S investment had rocketed then that may have made transferring to another LISA a bit more painful in terms of the restrictions & yearly limits with regards to choosing which approach to take (although, if it was rejected from the transfer process for being over limit, you'd be able to retain anything over 4K from that anyway - guessing it would count as interest/dividend as a opposed to a subscription so may not matter, but I digress...) you would still be able to transfer over whatever figure reached your limit (and the good investing on your part with anything over that limit would be a nice little cash injection for whatever over the limit you couldn't transfer and ergo had to move to another account/withdraw - ie. you still get to keep the and moreover, you wouldn't have had to add so much of your own money in to top up the LISA to the limit - another bonus there!) but whether or not it counts as a subscription/interest/dividend and how LISA providers treat that seems fairly crucial in the above scenario - it'd be a shame if that was the situation we were in!

    I think I may just play this one safe, since my interest is so low ... If it was a lot higher it'd be a much different matter and I would be a bit more stressed over it than this
    • Warren1989
    • By Warren1989 6th Mar 18, 12:41 PM
    • 29 Posts
    • 2 Thanks
    Warren1989
    Have you paid any 2017/18 money into S&S ISAs at either iWeb or Fidelity? Given the HMRC rules about keeping current year contributions together for each type of ISA, I believe you'd fall foul of these if you ended the tax year with some 2017/18 money in a HL S&S ISA and other 2017/18 money in an S&S ISA with one of the others.
    Originally posted by eskbanker
    Yes, 16k Fidelity and 4k into this LISA.
    Sounds like it would be worth asking whichever one of iWeb or Fidelity holds your 2017/18 contributions if they can transfer in from a LISA at HL and, as per Alexland's post, if they're able to do so before the end of the tax year in a month's time....
    Originally posted by eskbanker
    Phoned and Fidelity can't receive a LISA and HL can't do some trickery and send it as a standard ISA. They also said they weren't able to transfer from my LISA to a S&S ISA with them, so all a bit negative.

    Looks like I will just have to close the LISA, withdraw to bank and chalk up a lost 4k ISA allowance to experience (I think it was worth it on the off-chance I use a mortgage to purchase a house).
    • NevvyC
    • By NevvyC 6th Mar 18, 12:53 PM
    • 60 Posts
    • 3 Thanks
    NevvyC
    Well, just got off the blower with Skipton and they are all over the place

    According to them I still have 3899 of allowance left ...

    Despite the fact I explained I had made a subscription to Nutmeg for 100 and then transferred this over to Skipton where a 1 subscription was made (this would make sense for the 3899 figure remaining... Though I then stated that I had earned most, if not all of the interest on the H2B ISA I also transferred over in this tax year (as I only oppened it 2months prior to the start of this tax year) and should that 25ish not be deducted from the 3899 figure ? As I had previously rung up to ascertain that this tax years' interest DID count towards the allowance from another Skipton colleague... However, this colleague was adamant that my remaining allowance was 3899 and also mentioned that my H2B provider had only stated 1.27 as interest earned this tax year from my H2B (which seems completely innacurate - and moreover would be more likely the sum, if any, I earned from interest on it LAST tax year - as the bulk of interest must have come from the last 10 / 11months... Not the first 1 or 2months!)

    They then proceeded to tell me that's why it was 3899 remaining because of the 99.87 I transfered from Nutmeg (my portfolio dropped 13p, no big deal as only 13p and it was only for the clock ticking...) and the interest I had had quoted from my H2B provider during the transfer process (even though those 2 figures don't add up to 101 and moreover that doesn't even include my Skipton subscription of 1 then!)

    So now I'm not sure what to do

    I may just go with what they are saying since they are the LISA providers n all, and if they're in the wrong then it's their mess to clean up not mine - since I've done everything I can to play by the rules and made numerous calls to try to ascertain correct & accurate information !?
    Last edited by NevvyC; 06-03-2018 at 12:55 PM.
    • ryath
    • By ryath 6th Mar 18, 7:13 PM
    • 35 Posts
    • 54 Thanks
    ryath
    I transferred my HTB ISA balance as at 5/4/17 to a LISA. Does the rule about interest earned in a HTB ISA reducing the amount you can contribute to a LISA this tax year still apply if you don't transfer your post 6/4/17 HTB ISA?
    Save 12k in 2018 target = 0 / 6,000 0% No. 006
    • Alexland
    • By Alexland 6th Mar 18, 7:23 PM
    • 2,389 Posts
    • 1,791 Thanks
    Alexland
    I transferred my HTB ISA balance as at 5/4/17 to a LISA. Does the rule about interest earned in a HTB ISA reducing the amount you can contribute to a LISA this tax year still apply if you don't transfer your post 6/4/17 HTB ISA?
    Originally posted by ryath
    You can still contribute 4k into your LISA if you have left your current tax year contributions and interest in your HTB ISA.
    • Ithilien
    • By Ithilien 7th Mar 18, 7:56 PM
    • 43 Posts
    • 11 Thanks
    Ithilien
    We're due to complete on a newbuild, which falls in the LISA price bracket but is over the HTB ISA limit.

    We've both held LISA's since 6/4/17 (Nutmeg). We're in the process of moving this LISA to an AJ Bell one, as they accept HTB ISA transfers. We're also moving both our HTB ISAs to the LISAs.

    We are wondering how it works if we need to complete by say April 10th, whilst it looks like the government bonus won't be paid until a few weeks later. Can anyone help?
    • Alexland
    • By Alexland 7th Mar 18, 9:09 PM
    • 2,389 Posts
    • 1,791 Thanks
    Alexland
    We're due to complete on a newbuild, which falls in the LISA price bracket but is over the HTB ISA limit.

    We've both held LISA's since 6/4/17 (Nutmeg). We're in the process of moving this LISA to an AJ Bell one, as they accept HTB ISA transfers. We're also moving both our HTB ISAs to the LISAs.

    We are wondering how it works if we need to complete by say April 10th, whilst it looks like the government bonus won't be paid until a few weeks later. Can anyone help?
    Originally posted by Ithilien
    Yes the bonus might not be paid until late April or early May. In addition the LISA provider will take some time to process the solicitors withdrawal request.

    Without knowing your full circumstances it's hard to comment but from a purely bonus perspective it sounds like you would be best delaying completion if possible.

    Alex.
    Last edited by Alexland; 07-03-2018 at 9:13 PM.
    • cisamcgu
    • By cisamcgu 8th Mar 18, 10:10 AM
    • 65 Posts
    • 37 Thanks
    cisamcgu
    I have looked, but cannot see if this has been answered before, apologies if I am repeating a question :

    If someone opens a S&S LISA with 4000 then they get a government bonus of 1000 making their total 5000.

    They leave this for a few years and say it has grown to 7000 with no further investments. i.e. 2000 'profit'

    If they then want to withdraw this money early, not for a house or because they are 60, do they have to pay back

    a) 25% of 7000 to the government (1750) leaving them with 5250 [7000-1750]
    or
    b) 25% of 5000 (1250) leaving them with 5750 [7000-1250].

    i.e. is the 25% payback from the initial amount or from the current value ?
    Last edited by cisamcgu; 08-03-2018 at 10:11 AM. Reason: formatting
    • eskbanker
    • By eskbanker 8th Mar 18, 12:13 PM
    • 7,168 Posts
    • 7,618 Thanks
    eskbanker
    is the 25% payback from the initial amount or from the current value ?
    Originally posted by cisamcgu
    It's the latter, the penalty is 25% of the amount withdrawn.
    • asc1991
    • By asc1991 8th Mar 18, 12:36 PM
    • 53 Posts
    • 7 Thanks
    asc1991
    Withdrawing before monthly bonus paid
    Let's say my 25% bonus to my monthly LISA contributions is paid on the 25th of every month...
    .
    On June 3rd I put 1000 into my LISA.... on June 11th I then use my entire LISA for a deposit on a house...

    How do I get the 25% bonus on that 1000. I spoke to HMRC and they say that I would be entitled to that bonus. But the lady was quite blunt saying she didn't know how I'd get it.
    • Alexland
    • By Alexland 8th Mar 18, 3:24 PM
    • 2,389 Posts
    • 1,791 Thanks
    Alexland
    There is a difference between being entitled to a bonus and getting access to it.

    I guess in that situation you will have made your property withdrawal before the bonus was added so the bonus would later be added to the account and earn interest until you withdraw it (paying the penalty on the withdrawn amount) or access at 60+ with no penalty.
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