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  • FIRST POST
    • STitch
    • By STitch 2nd Mar 18, 11:49 PM
    • 4Posts
    • 0Thanks
    STitch
    H2B -> LISA: Maximising gov bonus
    • #1
    • 2nd Mar 18, 11:49 PM
    H2B -> LISA: Maximising gov bonus 2nd Mar 18 at 11:49 PM
    Hi all, looking for clarification with my train of thought with my H2B -> LISA transfer to maximise gov bonus payments. Looking to purchase a property ready in December 18 / Jan 19 as a 1st time buyer. I have had my LISA open since Aug 17 with only 1 in to get the 'clock ticking' on the 12 months.

    So my understanding is, that I have received confirmation that the money in my H2B ISA has met the deadline to move into my Skipton cash LISA. My 1st question (or reassurance) is as I am transferring more than 4000 this tax year from my H2B, I won't be capped at 1000 gov bonus this tax year - right?

    If that being said is true, my 2nd question is I have also been saving money in the 5% 1st direct regular saver, should I either: a) withdraw early and not receive the 5% interest (due in July) and add current funds into 17/18 LISA allowance and would that receive the 25% bonus too?

    OR b) wait till the account matures in July and move the funds over into the LISA eating up 18/19 4,000 allowance?

    Many thanks in advance for your help
Page 1
    • eskbanker
    • By eskbanker 3rd Mar 18, 12:20 AM
    • 7,137 Posts
    • 7,562 Thanks
    eskbanker
    • #2
    • 3rd Mar 18, 12:20 AM
    • #2
    • 3rd Mar 18, 12:20 AM
    Q1's a yes but probably (b) for Q2 as I can't see why you'd want to do this in 17/18 - you would get pro rata interest on the FD regular saver whenever you withdrew anyway, but do you have anything else that would eat up your 18/19 4K LISA allowance, as it isn't clear why you'd be reluctant to do this?
    • STitch
    • By STitch 3rd Mar 18, 12:34 AM
    • 4 Posts
    • 0 Thanks
    STitch
    • #3
    • 3rd Mar 18, 12:34 AM
    • #3
    • 3rd Mar 18, 12:34 AM
    More weighing up if I should sacrifice the 5% gains from now to July by taking advantage of my remaining 3,999 LISA allowance for 17/18 and get 25% bonus on it or wait till August and move over the funds but eating up 18/19 allowance.
    • eskbanker
    • By eskbanker 3rd Mar 18, 12:50 AM
    • 7,137 Posts
    • 7,562 Thanks
    eskbanker
    • #4
    • 3rd Mar 18, 12:50 AM
    • #4
    • 3rd Mar 18, 12:50 AM
    I'm still not with you - if you paid the FD proceeds into the LISA in July/August you'd still get the 25% bonus on those the following month, well before your property purchase, so what's the downside to doing this?

    Also, your HTB transfer will include some 17/18 money, which does count against your 17/18 LISA allowance, i.e. there is no longer 3,999 remaining, unless you stopped paying into it nearly a year ago?

    Edit: were you perhaps not realising that bonuses will be paid monthly rather than annually from 2018/19 onwards?
    Last edited by eskbanker; 03-03-2018 at 9:15 AM.
    • Plus
    • By Plus 3rd Mar 18, 10:32 AM
    • 356 Posts
    • 279 Thanks
    Plus
    • #5
    • 3rd Mar 18, 10:32 AM
    • #5
    • 3rd Mar 18, 10:32 AM
    The question comes down to: do you or will you have any spare cash?

    If all you have is 4K, then it you'll get the same 1K LISA bonus whether you pay it in 17/18 or 18/19. In that case, it makes sense to collect the interest on the FD saver in July and pay 4K into the LISA then.

    But if you're likely to have more money in 18/19, the question is whether you should forego interest now (FD savers force you to close the account and pay 0.05% if you make a withdrawal) to claim the bonus now, so you can pay in another 4K later. Let's do some sums:

    For 4000 built up over 12 months, the interest at 5% would be 107.52
    For 4000 paid into the LISA, the bonus would be 1000

    Now, you didn't tell us how much you have in the FD account which will affect the first calculation slightly. But even so, if you are likely to have access to more money in 2018/19 it makes sense to fill up your 17/18 allowance now so you can claim the bonus on two lots of 4K for both 17/18 and 18/19.
    • STitch
    • By STitch 8th Mar 18, 8:36 PM
    • 4 Posts
    • 0 Thanks
    STitch
    • #6
    • 8th Mar 18, 8:36 PM
    • #6
    • 8th Mar 18, 8:36 PM
    I only have 2,000 in my FD saver account and would be looking to buy a property which won!!!8217;t be ready till December 2018 - exchange of monies around August/September time.
    • pink_pirlie
    • By pink_pirlie 9th Mar 18, 10:43 PM
    • 160 Posts
    • 102 Thanks
    pink_pirlie
    • #7
    • 9th Mar 18, 10:43 PM
    • #7
    • 9th Mar 18, 10:43 PM
    Will you have other money to deposit in 18/19 that would use up the 4K limit before you buy?

    Three scenarios to explain -

    If you will have an additional 4000 to put in your LISA in 18/19 (excluding the FD monies) then you should take the money out and put it in in 17/18. You will forego FD interest but you will get 25% bonus on the full 6000.

    If you will have an additional 1000 to put in your LISA in 18/19 (excluding the FD monies) then you should keep your money in FD and transfer in 18/19 as the 1000 you save plus the 2000 from FD will not get you to your limit. You will get the FD interest and still get the 25% bonus on the 3000 + interest.

    If you will have an additional 2000 to put in your LISA in 18/19 (excluding the FD monies) then you can weigh up what is best for you and chance of you saving more than you think. The extra 2000 saved plus the 2000 from FD would hit your 18/19 limit and you therefore could have got the bonus on any excess if you had transferred the FD in 17/18. Your question is whether the 25% on top of the excess is more or less than the interest forgone on the FD account...
    Last edited by pink_pirlie; 09-03-2018 at 10:45 PM. Reason: Remove random characters
    • STitch
    • By STitch 11th Mar 18, 12:34 AM
    • 4 Posts
    • 0 Thanks
    STitch
    • #8
    • 11th Mar 18, 12:34 AM
    Update with purchase!
    • #8
    • 11th Mar 18, 12:34 AM
    Thanks for the advice to date, yet I have an update and would appreciate any further advice and assurances.

    Property completion has been brought forward and is now expected to be ready between Sep -> late Oct for 208,995. The developers solicitors have agreed to: as my LISA won't mature till 9th August, to accept my 2k cash savings upon exchange and then as soon as my LISA permits - to transfer the remaining funds to make up the remaining left for a 5% deposit.

    Now my H2B funds have left my halifax h2b ISA and is in my Skipton LISA. I will receive 25% bonus on 6,254 transferred right (1,563)? I also know that I need to add 506 to the LISA (and therefore receive an additional 25% of 126.40 to bring total savings to; 6,760 + [25% bonus = 1,689.75] + 2,000 cash savings [1st direct]), and will be done at the end of the month.

    1)a) Am I right in thinking that I will receive bonus 25% on current transferred amount of 6,254 (bonus total of 1,563) from a H2B ISA? 1)b) or does the 4,000 limit get 'eaten into' because I have paid 200 p/m into halifax ISA since start of 17/18 tax year?
    2) Under the presumption that above works out... Will I have enough LISA allowance to transfer in 506 before 17/18 tax end in April or should I be holding onto it till new allowance in 18/19 tax year to receive 25% bonus?

    Thank you in advance for your help and advice!
    • bowlhead99
    • By bowlhead99 11th Mar 18, 8:13 AM
    • 7,831 Posts
    • 14,302 Thanks
    bowlhead99
    • #9
    • 11th Mar 18, 8:13 AM
    • #9
    • 11th Mar 18, 8:13 AM
    Your LISA might not 'mature' until August (i.e. it will have been going for 12 months by then) but be aware that your purchase must complete within 90 days of drawing the money out of the LISA. So, if you take your money out of the LISA on 1/8/18 to give to the seller, you need to have completed by 30/10/18.

    If you can't, your solicitor would have to apply for an extension or return the funds to the LISA (which you wouldn't be able to afford to do, because you already gave the money to the developer). The extension request would hopefuly be fine if there's a genuine purchase in progress, but nobody has any practical experience of doing it because the product is so new that nobody qualifies to buy a property with a LISA just yet. I mention this because you said the completion window was up to late October and it had previously been planned at December- so it could feasibly slip beyond 30 October unless you have a cast iron guarantee in the contract.

    You mention the amount you transferred from the HTB into the LISA is 6254 and of this, you have paid 200pm during the current year. Depending exactly when you started and stopped paying those 200s, you might have 2000-2400 of contributions, plus interest on the account earned in 2017/18, as the 'current year' 2017/18 element within the 6254 total. Don't worry, you will be getting the 25% bonus on the whole 6254; but the splt of the 6254 transferred in - into current year contributions and previous year contributions - is what determines how much 'space' you have within your current year contribution limit to make further contributions. Bonus received does not affect the contribution limit, only what you actually contribute into the LISA.

    The money from 2016/17 and prior years gets a free pass into the LISA account but the current year 2017/18 element does not, and is taken off the 4000 limit.

    So looking at your LISA limit you have 4000 contribution limit and you will have the aforementioned 2000 to 2400 of 2017/18 HTB payments (plus current year interest earned in the HTB) to take off that limit to see what your remaining limit is.

    To keep things simple (you can replace with the actual numbers when you know them), let's just say the whole lot of 2017/18 HTB monthly contributions (2000-2400) and 2017/18 interest earned (100?200?250?) comes up to 2500 total. You would take that off the 4000 2017/18 contributions limit to see what your remaining limit is.

    4000 take off (say) 2500 of current year HTB money leaves 1500 remaining limit for the 2017/18 financial year.

    You have said you only want to add 506 to the LISA. You can do that today if you like, because 506 is well below the 1500 remaining limit for the year. Or you could put it in next month, in the next tax year. Either way, it will attract the 25% bonus (126.50) that you want.

    If it was me, and I had the cash available, I'd put it in now so it comes off the 2017/18 allowance not the 2018/19 allowance. That way, you'll have the entire 4000 2018/19 LISA allowance available so that if by some luck or hard saving you can raise another 4000 towards your property purchase before September / October completion, you can get 25% bonus on it by pushing it through the LISA in 2018/19. That would be up to another 1000 of free money to give to the developer, allowing you to get a smaller mortgage (but obviously meaning you have to commit more of your own money into the property too).
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