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  • FIRST POST
    • Dangerous_Dave2k
    • By Dangerous_Dave2k 9th Mar 18, 7:24 AM
    • 84Posts
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    Dangerous_Dave2k
    HTB ISA to LISA - should I have done it already?
    • #1
    • 9th Mar 18, 7:24 AM
    HTB ISA to LISA - should I have done it already? 9th Mar 18 at 7:24 AM
    I have an HTB ISA in Barclays which was opened with the maximum amount about a year ago, and was topped up with the maximum 200 per month ever since. It probably has about 3600 from me in it.

    I've decided I want to open a LISA (prospective 1st time home buyer) with Skipton. Reading around, I'm starting to get an inkling that there was a particular strategy I should have pursued to get the maximum benefit from both accounts. Can somebody explain to me what this is, and have I missed the deadline?

    Thanks for any replies.
Page 1
    • Dangerous_Dave2k
    • By Dangerous_Dave2k 9th Mar 18, 8:54 AM
    • 84 Posts
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    Dangerous_Dave2k
    • #2
    • 9th Mar 18, 8:54 AM
    • #2
    • 9th Mar 18, 8:54 AM
    I'm reading about this AJ Bell work around, since their (non-guaranteed) deadline is 19th March. My questions then are:

    1) Will my money then be invested in stocks/shares, with the risks that entails?

    2) Is it a straightforward procedure to transfer to Skipton after I've earned my 2017-18 bonus?
    • Curos
    • By Curos 9th Mar 18, 8:55 AM
    • 18 Posts
    • 6 Thanks
    Curos
    • #3
    • 9th Mar 18, 8:55 AM
    • #3
    • 9th Mar 18, 8:55 AM
    Hi Dave

    I think you're probably referring to point 7 of the following link: https://www.moneysavingexpert.com/savings/lifetime-ISAs

    It's really only regarding contributions in previous tax years (i.e. before the 17/18 tax year), so if you've only contributed this tax year I'm not aware of any particular 'strategy'.

    In any case, even if you had made contributions in previous tax years you have missed the Skipton transfer deadline of 1 March 2018 (there is a possible workaround detailed in the link and in other threads on this forum).

    You can still pay in to your LISA up to the maximum 4k allowance for this year from your HTB ISA (or any other account of your choosing).

    You may wish to keep some money in the HTB ISA to keep it open if it has a decent interest rate as a form of regular saver, but you won't be able to get the bonus from both the HTB ISA and LISA when buying a house.
    • eskbanker
    • By eskbanker 9th Mar 18, 8:56 AM
    • 7,141 Posts
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    eskbanker
    • #4
    • 9th Mar 18, 8:56 AM
    • #4
    • 9th Mar 18, 8:56 AM
    Although you've missed the deadline for transferring directly from HTB to Skipton LISA, there's nothing to stop you opening the LISA, closing the HTB, withdrawing the 3600 to your bank account and then paying it into the LISA (assuming you haven't made substantial contributions to other ISAs during 2017/18).

    If you do this all by 5 April, you'll still have another 4K of fresh allowance for the next tax year. You'll receive a 900 government bonus in late April or early May and then 25% of all subsequent contributions, applied about 4-8 weeks after they're made....
    • Dangerous_Dave2k
    • By Dangerous_Dave2k 9th Mar 18, 9:12 AM
    • 84 Posts
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    Dangerous_Dave2k
    • #5
    • 9th Mar 18, 9:12 AM
    • #5
    • 9th Mar 18, 9:12 AM
    If possible I'd like to get the 1400 that was in the HTB ISA by 5th April 2017 into a LISA - but apparently I cannot do this via Skipton before the new tax year. I'm trying to assess the dodginess of the work around that has been suggested, since I've not heard of AJ Bell (for all I know they could just run off with the cash), and I'm also not entirely sure what would be happening with any money put in their Stocks and Shares LISA (i.e. is it automatically invested and therefore at risk).
    • aj23
    • By aj23 9th Mar 18, 9:50 AM
    • 420 Posts
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    aj23
    • #6
    • 9th Mar 18, 9:50 AM
    • #6
    • 9th Mar 18, 9:50 AM
    You've missed Skipton's deadline for transferring in.

    You'd have to close your HTB and open a LISA and deposit the money.
    • eskbanker
    • By eskbanker 9th Mar 18, 1:05 PM
    • 7,141 Posts
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    eskbanker
    • #7
    • 9th Mar 18, 1:05 PM
    • #7
    • 9th Mar 18, 1:05 PM
    The limit on LISA contributions is 4K per tax year, so you can get 4K into one between now and 5 April and then another 4K in over the following 12 months.

    If you're starting with 3600 in total then there's no need to worry at all about transfers and workarounds, as this is within the 2017/18 LISA limit, but if you have other money available right now then it may be worth pursuing. How much do you have available for saving into a LISA?

    If desired, you can pay money into a S&S (L)ISA without actually investing it....
    • Dangerous_Dave2k
    • By Dangerous_Dave2k 9th Mar 18, 6:05 PM
    • 84 Posts
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    Dangerous_Dave2k
    • #8
    • 9th Mar 18, 6:05 PM
    • #8
    • 9th Mar 18, 6:05 PM

    If desired, you can pay money into a S&S (L)ISA without actually investing it....
    Originally posted by eskbanker

    This is the part I'm wondering about. I do have more than 3600 to invest, but I don't really want to put it at risk in stocks and shares. So with one of these S&S LISAs, is the money not automatically invested in some stock/share programme? Or does it just sit there on your account waiting to be invested by you?

    Out of curiosity, how is the value of an S&S LISA calculated for the purposes of the government bonus (if the money is invested in stocks and shares)?

    Also, are we 100% certain that you can transfer an S&S LISA into a cash LISA without any penalty?
    Last edited by Dangerous_Dave2k; 09-03-2018 at 6:07 PM.
    • Alexland
    • By Alexland 9th Mar 18, 6:09 PM
    • 2,388 Posts
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    Alexland
    • #9
    • 9th Mar 18, 6:09 PM
    • #9
    • 9th Mar 18, 6:09 PM
    This is the part I'm wondering about. I do have more than 3600 to invest, but I don't really want to put it at risk in stocks and shares. So with one of these S&S LISAs, is the money not automatically invested in some stock/share programme? Or does it just sit there on your account waiting to be invested by you?
    Originally posted by Dangerous_Dave2k
    Depends on your LISA provider - with a DIY platform such as HL or AJ Bell they will not invest it automatically - but Nutmeg would (who don't accept HTB transfers), etc.

    Out of curiosity, how is the value of an S&S LISA calculated for the purposes of the government bonus (if the money is invested in stocks and shares)?
    Originally posted by Dangerous_Dave2k
    It's based on your contribution - the money you add to the account which is a historical fact and doesn't change with the ups and downs of the investment performance.

    Also, are we 100% certain that you can transfer an S&S LISA into a cash LISA without any penalty?
    Originally posted by Dangerous_Dave2k
    Again depends on your LISA provider as some such as HL have exit/transfer fees. AJ Bell does not charge for cash transfers - only if you are trying to transfer investments.

    "Cash transfer to another Lifetime ISA manager - No charge"

    https://www.youinvest.co.uk/lifetime-isa/charges-and-rates
    Last edited by Alexland; 09-03-2018 at 6:14 PM.
    • Dangerous_Dave2k
    • By Dangerous_Dave2k 9th Mar 18, 6:22 PM
    • 84 Posts
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    Dangerous_Dave2k
    Again depends on your LISA provider as some such as HL have exit/transfer fees. AJ Bell does not charge for cash transfers - only if you are trying to transfer investments.

    "Cash transfer to another Lifetime ISA manager - No charge"

    https://www.youinvest.co.uk/lifetime-isa/charges-and-rates
    Originally posted by Alexland
    And the government would not have an issue with it being two different types of LISA? (i.e. there is no issue with transferring an S&S LISA into a cash LISA?)

    So the procedure would be to transfer my April 5th 2017 balance from my HTB to AJ Bell, add in 4000 of other funds before 06/04/2018, earn the bonus, and then transfer out to Skipton in the new tax year? Can anyone see any stumbling blocks/risks with this?
    • Alexland
    • By Alexland 9th Mar 18, 9:18 PM
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    Alexland
    Many people on these forums have been doing this recently as only S&S LISAs were available at launch and they really wanted the cash LISA for their short term saving for a property purchase.

    The biggest risk is that the HTB ISA transfer does not complete in time.

    Alex
    • ValiantSon
    • By ValiantSon 9th Mar 18, 9:35 PM
    • 1,867 Posts
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    ValiantSon
    You've missed Skipton's deadline for transferring in.

    You'd have to close your HTB and open a LISA and deposit the money.
    Originally posted by aj23
    Not if they transfer to a S&S ISA, e.g. AJ Bell, and keep the funds as cash. They can then receive the bonus and perform a second transfer to Skipton.
    • ValiantSon
    • By ValiantSon 9th Mar 18, 9:41 PM
    • 1,867 Posts
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    ValiantSon
    If possible I'd like to get the 1400 that was in the HTB ISA by 5th April 2017 into a LISA - but apparently I cannot do this via Skipton before the new tax year. I'm trying to assess the dodginess of the work around that has been suggested, since I've not heard of AJ Bell (for all I know they could just run off with the cash), and I'm also not entirely sure what would be happening with any money put in their Stocks and Shares LISA (i.e. is it automatically invested and therefore at risk).
    Originally posted by Dangerous_Dave2k
    The only real risk with the AJ Bell workaround is that your HTB funds don't transfer before the end of the tax year, but at present you are still within AJ Bell's expected timeframe, so this is unlikely, and if it did happen you would be no worse off as you simply wouldn't get the bonus and not taking action has the same result.

    AJ Bell have been operating since 1995, have around 40 billion in assets under administration and FSCS protection (50,000 limit). They are not going to run off with your money.

    Your funds would not be automatically invested in stocks and shares. They sit in your account as cash until you choose (or not) to invest them, so you don't need to worry about market volatility.
    • Alexland
    • By Alexland 9th Mar 18, 9:46 PM
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    Alexland
    Even within AJ Bell's timeline they have no control over how response the HTB ISA provider will be.

    When I moved my SIPP from AJ Bell YouInvest to Halifax SD (administered by AJ Bell from the same building in Manchester) it took months of chasing and it was only when Halifax encouraged the two transfer departments in AJ Bell to talk to each other did any traction occur.

    Alex
    • ValiantSon
    • By ValiantSon 9th Mar 18, 10:02 PM
    • 1,867 Posts
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    ValiantSon
    Even within AJ Bell's timeline they have no control over how response the HTB ISA provider will be.

    When I moved my SIPP from AJ Bell YouInvest to Halifax SD (administered by AJ Bell from the same building in Manchester) it took months of chasing and it was only when Halifax encouraged the two transfer departments in AJ Bell to talk to each other did any traction occur.

    Alex
    Originally posted by Alexland
    That's absolutely true, which is why I said "unlikely" to be a problem. As I said, however, if it doesn't complete in time then nothing has been lost.
    • Dangerous_Dave2k
    • By Dangerous_Dave2k 9th Mar 18, 10:43 PM
    • 84 Posts
    • 18 Thanks
    Dangerous_Dave2k
    Thanks for all the information. I have opened an S&S LISA with AJ Bell, and printed off the HTB transfer form. I have ticked that I only want to transfer the balance as at 5th of April 2017. I'm assuming this is ok?

    Then I assume I will need to top up the balance with an additional 4000 2017-18 allowance before 6th of April 2018 to max everything out?

    The form asks me for the details of my current ISA manager, which is Barclays - but which address do you think I should use for this? Should it be the address of the branch that I opened it with, or Barclays' central "ISA Processing Team", or some other address?
    • Alexland
    • By Alexland 9th Mar 18, 10:58 PM
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    Alexland
    As I said, however, if it doesn't complete in time then nothing has been lost.
    Originally posted by ValiantSon
    Well for it doesn't complete in time there is the danger it will be treated as a HTB to LISA transfer under the rules applying next tax year in which case the HTB ISA balance would count towards the 4k contribution allowance for that year.
    • Alexland
    • By Alexland 9th Mar 18, 11:02 PM
    • 2,388 Posts
    • 1,790 Thanks
    Alexland
    Thanks for all the information. I have opened an S&S LISA with AJ Bell, and printed off the HTB transfer form. I have ticked that I only want to transfer the balance as at 5th of April 2017. I'm assuming this is ok?

    Then I assume I will need to top up the balance with an additional 4000 2017-18 allowance before 6th of April 2018 to max everything out?
    Originally posted by Dangerous_Dave2k
    Yes sounds reasonable for what you are trying to achieve. Remember the LISA needs to be open at least 12 months from initial contribution before it can be used for a qualifying property purchase without incurring an early withdrawal penalty.

    The form asks me for the details of my current ISA manager, which is Barclays - but which address do you think I should use for this? Should it be the address of the branch that I opened it with, or Barclays' central "ISA Processing Team", or some other address?
    Originally posted by Dangerous_Dave2k
    Maybe phone Barclays in the morning to ask be best address to avoid unnecessary delays. It might be that whatever you write down AJ Bell will know the right address anyway from previous transfers they have processed.

    Alex
    Last edited by Alexland; 09-03-2018 at 11:05 PM.
    • ValiantSon
    • By ValiantSon 9th Mar 18, 11:05 PM
    • 1,867 Posts
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    ValiantSon
    Well for it doesn't complete in time there is the danger it will be treated as a HTB to LISA transfer under the rules applying next tax year in which case the HTB ISA balance would count towards the 4k contribution allowance for that year.
    Originally posted by Alexland
    I can't say for certain, but I would think that you would have reasonable grounds to challenge that as the transfer was requested nearly a month before the end of the tax year.
    • Alexland
    • By Alexland 9th Mar 18, 11:12 PM
    • 2,388 Posts
    • 1,790 Thanks
    Alexland
    I can't say for certain, but I would think that you would have reasonable grounds to challenge that as the transfer was requested nearly a month before the end of the tax year.
    Originally posted by ValiantSon
    The rules relate to when the transfer occurs rather than when it was requested. ISA managers are given 30 days to complete a transfer. Tricky.
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