Lifetime isa question.

DJMK4

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I opened one and put a pound in but didn't bother using it or transferring as I have purchased a house in last month or two so will be using my help to buy ISA bonus.

Is it worth using this ISA then for the pension side even though I won't have much to put in to pension contributions at the moment . As I want to build up my savings. .
 

rallyfan1986

rallyfan1986

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Moses said:
No. Pay it any time in the financial year. If you can get a okay interest rate elsewhere it makes sense to keep it in those accounts and then move it to the LISA near the end of the financial year.
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Cheers! I was thinking as the bonus is paid monthly I should get it in as soon as possible

Although there isn't really many places that pay decent interest on these sums of money
 

VincentHanna

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Just got this in my email about my LISA

"Great news, your bonus payment of £500.00 has been received from HMRC and added to your Lifetime ISA."

Which is very confusing, as I was under the impression the bonus wouldn't be paid until the new tax year in April (which is the advice that Skipton gave me on post 82)

Because so far, I only put £2000 of my £4000 allowance in. If I had done the full amount I'd have had a £1000 bonus.
 

Mason-

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VincentHanna said:
Got it

So if I pay £1000 in January, I'll get £250 bonus in February and £1000 in February i'll get £250 bonus in March
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Hi, yep. It is in the FAQs:

HMRC will calculate bonus payments for your Lifetime ISA account on a month-by-month basis. Your bonus is calculated on any payments you make into your account from the 6th of the month to the 5th of the following month. Your bonus will be paid into your account within 14 days of the 20th of month two.

The day we receive payment from HMRC, we pay it directly into your account, so you don’t lose any interest.

Important – In order to receive the 25% government bonus you must ensure your details held at both Skipton and HMRC are correct. This includes both your first name and surname, date of birth and National Insurance number (you must not hold a temporary National insurance number to qualify for a Lifetime ISA).
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I suppose they wanted to do this to stop everyone buying at the same time.

So e.g. any money paid in between 6th January and 5th February, you will receive the bonus between 20 February - 6 March.
 

Semple

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I'm going to assume your money is locked in, until you purchase a property or eventually withdraw it as a pension? i.e. with the HTB ISA, you could just withdraw your funds to buy a car for example, but you'd lose the hidden bonus. I'm not sure how that would work with a LISA if they're already paying you the bonus directly.

Mine and my partners plans have changed, we almost bought a house last year but pulled out after a number of problems surfaced. She's now decided to go back to uni, which obviously means any mortgage calculation would be based solely on my salary. Ergo we've decided to stay put renting until she qualifies - unless of course Brexit causes house prices to tumble.

We've both currently got the HTB ISA's that we've had since launch, and they have 9k ea with the hidden bonus of 2.25k ea, but the big kicker is that these can only be used on a property of upto 250k. That was our original upper limit and we've struggled to find something that we like in that price range. Obviously when she graduates, her salary combined with mine means we could afford significantly more than the 250k, so doesn't really make sense to stick with the HTB ISA anymore. Also with her course spanning potentially 4 financial years (technically 3, but April to June would be the start of a new financial year), we'd be able to build up a bigger lump sum from the bonus.

I think i've pretty much convinced myself that this is the better route to take, i just don't like giving up that flexibility that if Brexit did cause a big drop in prices and we found a property that we'd like, we'd end up losing out on the HTB bonus that we've accrued so far.
 

VincentHanna

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There is a penalty of 25% if you withdraw your Lifetime ISA for any reason other than buying a house or for a pension.

There was a time when you could transfer your HTB ISA in to a LISA without it counting toward your £4000 LISA limit, but that time has passed, so the best you could do now would be to put £4000 each in before April and £4000 each in after April, but then you still wouldn't be able to put the other £1000 in until April 2020.

Sounds like you are better off sticking with HTB.
 

Semple

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VincentHanna said:
There is a penalty of 25% if you withdraw your Lifetime ISA for any reason other than buying a house or for a pension.

There was a time when you could transfer your HTB ISA in to a LISA without it counting toward your £4000 LISA limit, but that time has passed, so the best you could do now would be to put £4000 each in before April and £4000 each in after April, but then you still wouldn't be able to put the other £1000 in until April 2020.

Sounds like you are better off sticking with HTB.
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Ah yes just read about the 25% withdrawal fee, although this does include the bonus you're paid, so if you had 4k in + 1k bonus and closed, you'd lose 25% of 5k = 1.25k so you'd basically lose £250.

Not being able to transfer the full 9k isn't really an issue - interest rates are poor so it's not going to make too much difference. We don't use an ISA elsewhere, so would be nowhere near the 20k ISA limit even if we withdrew 4k out of the HTB ISA to fund the LISA. Although i am surprised why they won't let you transfer...

Newcastle has the highest interest LISA at 1.1% currently. So even if i withdrew 4K to feed the LISA, and stuck 5K in a 2.1% 1yf then you'd still earn more interest than transferring the full 9k over.

We now wouldn't be looking to buy for another ~2.5 years now, so would actually earn more bonus with the LISA.
 

VincentHanna

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Holy thread revival Batman.

I'm desperately trying to work out how much I would lose from mines and my wifes ISA's if we buy a house that's £460,000

I know it's a 25% penalty, but does that factor in money you might have initially transferred from a Help to Buy ISA?

For example - If I had £30K is it:

30,000
Divide by
1.25?

Or is it more complex than that?

Developer will only either pay our stamp duty or drop the house to £450,000, not both, so I'm trying to work out the least worst option!
 

Surveyor

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VincentHanna said:
Holy thread revival Batman.

I'm desperately trying to work out how much I would lose from mines and my wifes ISA's if we buy a house that's £460,000

I know it's a 25% penalty, but does that factor in money you might have initially transferred from a Help to Buy ISA?

For example - If I had £30K is it:

30,000
Divide by
1.25?

Or is it more complex than that?

Developer will only either pay our stamp duty or drop the house to £450,000, not both, so I'm trying to work out the least worst option!
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You should seek some professional advice but the legislation refers to a charge on the amount of the withdrawal so it seems the source is irrelevant.

The charge is 25% so your calculation should be £30,000 divided by 1.333 or £30,000 less 25%.
 
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