IMPORTANT Message - Urgent consideration required before March 2018
Urgent consideration required before March 2018
Transferring a Help to Buy ISA to a Lifetime ISA
If you're thinking about transferring an existing Help to Buy ISA or other ISA into a Lifetime ISA before the deadline then this needs to be done before the end of this tax year (April 5th 2018). However because some Help to Buy ISA providers need to complete their internal processes in time, then they are suggesting that to be sure of meeting the cut-off date that you transfer before the 1 March 2018.
Why transfer your Help to Buy ISA now?
You can make a single transfer of the balance of a Help to Buy ISA as at 5 April 2017 without it counting towards your £4,000 annual Lifetime ISA allowance in the 2017/18 tax year. The whole amount you pay in will benefit from the 25% government bonus.
The following transfers will count towards your £4,000 Lifetime ISA allowance:
- Subsequent transfers of previous tax years' Help To Buy ISA savings
- Transfers of current tax year's Help To Buy ISA savings
- Any transfers after 5 April 2018
You can only use the bonus from either a Lifetime ISA or a Help to Buy ISA - and not from both - to buy your first home. Therefore, if you intend using the money in your Lifetime ISA for this purpose, the only way to ensure that you receive a 25% government bonus on the money you'd built up in your Help To Buy ISA before 6 April 2017 without affecting your Lifetime ISA allowance is to transfer it before the end of this tax year. You can use your Lifetime ISA to buy your first home 12 months after opening it.
|Lifetime ISA||Help to Buy ISA|
|How much can you save?||£4,000/yr||£2,400/yr (£3,400 in year one)|
|Can you put lump sums in?||Yes||No, you need to save monthly|
|What's the max bonus?||£32,000 (assumes max contribution over 32 years)||£3,000|
|When's the bonus paid?||Annually (thus you get interest on the bonus once it's paid)||When you buy a home (so no interest on the bonus)|
|Can you invest as well as save?||Yes, with cash & shares Lifetime ISAs||No. Cash only|
|What's the max property price?||£450,000||£250,000 (£450k in London)|
|When can you use it to buy a home?||After the ISA has been open 12mths||Once you've £1,600+ saved (which can be done in three months)|
|Who can open it?||Anyone aged 18 to 39||Any first-time buyer aged 16+|
|Can I withdraw money if not buying a house?||Yes for retirement, but if earlier you won't get bonus and may pay a penalty (still being consulted on)||Yes at any time, you just don't get bonus|