Loophole to get an extra £1000 in your Lifetime ISA
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Loophole to get an extra £1000 in your Lifetime ISA

Editor 33
Editor
Found 14th Nov
This is quite specific but if you’re transferring from a Help to Buy ISA to a Lifetime ISA you could pocket an extra £1,000 from the government if you make the switch before April 2018.

Basically, any money you had saved in a Help to Buy Isa before the Lifetime Isa was launched (6 April 2017) can be transferred to a Lifetime ISA in the first 12 months Lifetime ISAs are available (i.e to 5 April 2018) without counting towards the £4,000 contribution limit for the 2017-18 tax year.

Contribution limits mean the most you could have saved in a Help To Buy ISA from when they were launched in December 2015 to when Lifetime ISAs were launched in April 2017 is £4,000.

If you transfer this £4,000 to a Lifetime ISA before April, it won’t count towards your Lifetime ISA limit for this year (which is also £4,000).

So, you can contribute another £4,000. You’ll get the government bonus on the total £8,000 – that’s £2,000.

In all other years the maximum bonus you can get from the Lifetime ISA is £1,000.

Obviously, this all depends on you having sufficient funds to move around but if you have, it’s a no-brainer.

And the Lifetime Isa is a better all-round bet than the Help To Buy ISA (you can save more for longer and get a much bigger handout from the government).

Note that funds in a Help To Buy ISA must go towards a first property while funds in a Lifetime ISA can go towards a property or retirement.

You need to have had a LISA open for at least a year for it to be used on property. This includes just paying £1 into it, and then you can transfer it to a different one in subsequent years and still have this condition met.

If you're buying soon, stick with HTB.

Main difference is that LISA you can buy properties upto £450k, HTB is only £250K outside of London (£450k inside).

If you're in London, stick with HTB (good luck finding a property under that price, though!)
33 Comments

From what I understand you can't contribute the full £4000 if you have contributed to your help to buy ISA this year? Eg £2400 deposited in help to buy. You can only put £1600 in lifetime ISA.

shame no normal savings isa bonus

Original Poster Editor

Yep, you need to have deposited the money in the Help To Buy ISA BEFORE April 2017 to benefit from the loophole.

Funds deposited after April 2017 can be transferred but will count towards this year's contribution limit.

Hope that makes sense.

You can only do this if you are aged between 18 and 39?

Common knowledge, this has been on Martin Lewis's site for months

I’m really struggling to get my head round this subject.

I took out a help to buy when they first came out paying the max of £200 in each month and have a physical balance of about £5600, this doesn’t include the 25% gov bonus as that doesn’t show as a balance

Could anyone answer could I transfer all of this to a lifetime ISS now and will it then include the help to buy bonus on top making it a physical balance of £7000? Plus the lifetime ISA OF £1000?

Iv tried researching an answer but as I say I’m struggling to get to grips with it.

The only problem is there's still not a great choice of LISAs, with only 1 cash-only option available (at a measly 0.75%), with the rest being stocks and shares (which give uncertain/risky returns).

I'm still currently getting 3.5% on my HTB so not really sure it's worth the move for me..

bla_and1 h, 2 m ago

I’m really struggling to get my head round this subject.I took out a help t …I’m really struggling to get my head round this subject.I took out a help to buy when they first came out paying the max of £200 in each month and have a physical balance of about £5600, this doesn’t include the 25% gov bonus as that doesn’t show as a balanceCould anyone answer could I transfer all of this to a lifetime ISS now and will it then include the help to buy bonus on top making it a physical balance of £7000? Plus the lifetime ISA OF £1000?Iv tried researching an answer but as I say I’m struggling to get to grips with it.



Yes. ANYTHING you had in a HTB ISA prior April 2017 can be fully transferred into a LISA without penalties. You can then top it up with an additional £4000 for this tax year.

I'd leave it in your HTB until nearer the time, as to maximise interest due to LISAs on offer not being very good at the moment. Only "worthwhile" ones are S&S, but they, of course, carry risk.

Thanks for this and the info. HOT added.

So, if a person has the original HTB and they have been paying in from the start at £200 PCM and still are. Best advice is to open/transfer to a Lifetime ISA in March and then TopUp £4000.
After that what can they pay in per year maximum? (Guessing £4000?) after April? Can this be done in a Lump sum annually, or monthy?

Chiptivo5 m ago

Thanks for this and the info. HOT added. So, if a person has the original …Thanks for this and the info. HOT added. So, if a person has the original HTB and they have been paying in from the start at £200 PCM and still are. Best advice is to open/transfer to a Lifetime ISA in March and then TopUp £4000. After that what can they pay in per year maximum? (Guessing £4000?) after April? Can this be done in a Lump sum annually, or monthy?




Yup. You can pay the £4000 however you like. As long as it's within the tax year bracket, it'll count. You can't take it out and put it in again. I believe they also penalise you 25% for withdrawing, so do be careful in that regard.

Well, last i knew, there were hardly any banks offering the LISA so I cant see much of a deal. Last i checked, Halifax, Nationwide or Santander were not offering it.

Most peoppe not buying a house probably don't want to have a LISA. Better to fill your pension first.

Also note this trick doesn't increase your £20k ISA annual allowence - not that there is any suggestion it would - but take care if you have S&S ISA along with HTB ISA and also LISA not to oversubscribe in the same tax year.

Mikey16103 h, 45 m ago

Common knowledge, this has been on Martin Lewis's site for months


Not everyone visits MSE, but thanks for the helpful input!

AlexPritchard2 h, 28 m ago

The only problem is there's still not a great choice of LISAs, with only 1 …The only problem is there's still not a great choice of LISAs, with only 1 cash-only option available (at a measly 0.75%), with the rest being stocks and shares (which give uncertain/risky returns).I'm still currently getting 3.5% on my HTB so not really sure it's worth the move for me..


Depends when you want the bonus, if you continue with HTB ISA the bonus doesn't go towards your deposit (which was the whole idea of these) and for that reason I'm transferring my HTB to a lifetime ISA next month. You can leave it until later and transfer just before end of tax year but Skipton can stop accepting transfers at any time if everybody rushes to transfer at the same time. I know the interest is better on HTB ISAs but it's all about when you get the bonus for me and I'd much rather have it go towards the actual deposit.

For homebuyers, just be aware "Your Lifetime ISA must be open for at least 12 months before you can withdraw funds from it to buy your first home". So not ideal for people looking to purchase home within 12 months.

New.Born3 h, 12 m ago

Not everyone visits MSE, but thanks for the helpful input!


I agree. I'm normally on the ball with money matters and use MSE but never knew this. Thanks op.

Original Poster Editor

Chiptivo14 h, 23 m ago

Thanks for this and the info. HOT added. So, if a person has the original …Thanks for this and the info. HOT added. So, if a person has the original HTB and they have been paying in from the start at £200 PCM and still are. Best advice is to open/transfer to a Lifetime ISA in March and then TopUp £4000. After that what can they pay in per year maximum? (Guessing £4000?) after April? Can this be done in a Lump sum annually, or monthy?


Hi. Best advice is to open a Lifetime ISA now (before April 18) and make the transfer. Transfers before April don't count towards the annual limit so you can add in another £4k (assuming you have the cash). After that you can pay in £4k a year. This can be done in a lump sum on day one giving the chance for maximum returns. H2B is limited to £200 a month, limiting the interest you can earn. Hope this helps.

Above liked.

Yes, it does thanks. That is the plan.
One hicup... I've been looking into LISA accounts and not many people do them, and the ones that do have a really poor interest return?
Thoughts?

Hi, Can anyone help please. My son had a balance of £4,300 in his HTB ISA in March 2017 and deposits £200 a month into it since it was opened in December 2015.

Current balance is now £5,900.

What happens to the accrued government bonus from the last 2 years?

Also , is it possible to just switch the whole balance over (£5,900) and is that penalty free (moving from Halifax btw) ?

He currently gets 3.5% interest on HTB ISA with the Halifax and the purpose of the account is to buy his first home and he will have £4000 extra to deposit as a lump sum in April 2018.
Is it beneficial to switch and is the bonus paid into the account every year so the physical balance is updated ?

Any help would be most appreciated

rooney1058 m ago

Hi, Can anyone help please. My son had a balance of £4,300 in his HTB ISA …Hi, Can anyone help please. My son had a balance of £4,300 in his HTB ISA in March 2017 and deposits £200 a month into it since it was opened in December 2015. Current balance is now £5,900.What happens to the accrued government bonus from the last 2 years? Also , is it possible to just switch the whole balance over (£5,900) and is that penalty free (moving from Halifax btw) ?He currently gets 3.5% interest on HTB ISA with the Halifax and the purpose of the account is to buy his first home and he will have £4000 extra to deposit as a lump sum in April 2018. Is it beneficial to switch and is the bonus paid into the account every year so the physical balance is updated ?Any help would be most appreciated

You get the bonus on the lifetime isa instead, you don't get the bonus for both. Bonus will be paid in April for transfers and deposits up until then, thereafter it will be paid within a month of deposits (abit like tax relief on personal pension contributions). He can transfer the HTB ISA between now and April and he'll receive the bonus on the lot. If you were to transfer the HTB ISA now then any deposits made this tax year count towards the 4k annual allowance, eg, I am transferring my HTB ISA next month and have been paying in 200 per month in this tax year which totals 1600 so I can still pay 2400 in the lifetime ISA this tax year.
There are no penalties for transferring. Remember, if you stay with a help to buy ISA a solicitor has to claim the bonus for you and it doesn't go towards the actual deposit! Also the lifetime ISA has to have been open a year before you can use it to buy a house.

Mikey161019 m ago

You get the bonus on the lifetime isa instead, you don't get the bonus for …You get the bonus on the lifetime isa instead, you don't get the bonus for both. Bonus will be paid in April for transfers and deposits up until then, thereafter it will be paid within a month of deposits (abit like tax relief on personal pension contributions). He can transfer the HTB ISA between now and April and he'll receive the bonus on the lot. If you were to transfer the HTB ISA now then any deposits made this tax year count towards the 4k annual allowance, eg, I am transferring my HTB ISA next month and have been paying in 200 per month in this tax year which totals 1600 so I can still pay 2400 in the lifetime ISA this tax year.There are no penalties for transferring. Remember, if you stay with a help to buy ISA a solicitor has to claim the bonus for you and it doesn't go towards the actual deposit! Also the lifetime ISA has to have been open a year before you can use it to buy a house.



Thanks for that, I kind of get it lol .... so if I transfer my entire balance over none of this counts towards 'deposit allowances' , think that's where I am getting confused !
With the better rate of interest being the Halifax at 3.5% it would make sense to transfer the whole balance in March by which time my total deposits would have been £200 x 12 = £2400 , I can then also add £1600 prior to the next tax year commencing in April 2018.
After April 2018 I can the deposit another £4k as a lump sum if desired. Have I got all that right ? lol

rooney101 h, 56 m ago

Hi, Can anyone help please. My son had a balance of £4,300 in his HTB ISA …Hi, Can anyone help please. My son had a balance of £4,300 in his HTB ISA in March 2017 and deposits £200 a month into it since it was opened in December 2015. Current balance is now £5,900.What happens to the accrued government bonus from the last 2 years? Also , is it possible to just switch the whole balance over (£5,900) and is that penalty free (moving from Halifax btw) ?He currently gets 3.5% interest on HTB ISA with the Halifax and the purpose of the account is to buy his first home and he will have £4000 extra to deposit as a lump sum in April 2018. Is it beneficial to switch and is the bonus paid into the account every year so the physical balance is updated ?Any help would be most appreciated


Im in the exact same position as your son and have the exact same queries as you.

I can’t find anywhere that confirms the accured government bonus form the last 2 years in the help to buy account will be credited to the LISA, as in the H2B it doesn’t show as a physical balance

bla_and31 m ago

Im in the exact same position as your son and have the exact same queries …Im in the exact same position as your son and have the exact same queries as you.I can’t find anywhere that confirms the accured government bonus form the last 2 years in the help to buy account will be credited to the LISA, as in the H2B it doesn’t show as a physical balance



From the advice given by Mikey1610 , it would appear that any bonus that you may have accrued will be lost if the ISA is transferred out.
That said , with approx. £6k saved already , this would equate to around £1500 government bonus which would be lost.
However, when transferring the entire balance to a LISA £1k would be credited straight away as the transfer is over £4k (Somebody please correct me if I am mistaken with this part)

After April '18 he can then invest £4k and receive a further £1000 in bonus. Total bonus by end of April '18 should then be £2k if I understand correctly. (£1k for the transfer and 1k for deposits at the start of the next tax year, ie after April '18)

The only bit I am still not 100% about is the transferring of the HTB ISA , does this class as a deposit , attracting the 25% bonus on £4000 of it ?
Edited by: "rooney10" 16th Nov

rooney1017 m ago

From the advice given by Mikey1610 , it would appear that any bonus that …From the advice given by Mikey1610 , it would appear that any bonus that you may have accrued will be lost if the ISA is transferred out.That said , with approx. £6k saved already , this would equate to around £1500 government bonus which would be lost.However, when transferring the entire balance to a LISA £1k would be credited straight away as the transfer is over £4k (Somebody please correct me if I am mistaken with this part)After April '18 he can then invest £4k and receive a further £1000 in bonus. Total bonus by end of April '18 should then be £2k if I understand correctly. (£1k for the transfer and 1k for deposits at the start of the next tax year, ie after April '18)The only bit I am still not 100% about is the transferring of the HTB ISA , does this class as a deposit , attracting the 25% bonus on £4000 of it ?


I believe you can transfer the full HTB isa in + 4k before April and then receive the 25% government bonus on the then full balance in April, then after April 18, transfer another 4k in.

Chiptivo16 m ago

I believe you can transfer the full HTB isa in + 4k before April and then …I believe you can transfer the full HTB isa in + 4k before April and then receive the 25% government bonus on the then full balance in April, then after April 18, transfer another 4k in.



Even though approx. £1600 has been deposited into the HTB ISA since April '17 ? So this years deposits would total £5600 and this would be fine ?

rooney101 h, 45 m ago

Thanks for that, I kind of get it lol .... so if I transfer my entire …Thanks for that, I kind of get it lol .... so if I transfer my entire balance over none of this counts towards 'deposit allowances' , think that's where I am getting confused !With the better rate of interest being the Halifax at 3.5% it would make sense to transfer the whole balance in March by which time my total deposits would have been £200 x 12 = £2400 , I can then also add £1600 prior to the next tax year commencing in April 2018.After April 2018 I can the deposit another £4k as a lump sum if desired. Have I got all that right ? lol

Correct, you can even pay 1600 in to a lifetime ISA now and transfer your help to buy ISA later. For the question from the other guy, you don't lose any bonus from what what you've saved in to your help to buy ISA thus far. You'll receive the bonus on the full transfer in so long as you transfer it in this tax year. Just remember that, I've already said further up, if thousands of people all try to transfer at the same time in March then Skipton can stop accepting transfers in if they can't cope with all the admin. For that reason you may want to transfer a little earlier to be on the safe side.

rooney1044 m ago

From the advice given by Mikey1610 , it would appear that any bonus that …From the advice given by Mikey1610 , it would appear that any bonus that you may have accrued will be lost if the ISA is transferred out.That said , with approx. £6k saved already , this would equate to around £1500 government bonus which would be lost.However, when transferring the entire balance to a LISA £1k would be credited straight away as the transfer is over £4k (Somebody please correct me if I am mistaken with this part)After April '18 he can then invest £4k and receive a further £1000 in bonus. Total bonus by end of April '18 should then be £2k if I understand correctly. (£1k for the transfer and 1k for deposits at the start of the next tax year, ie after April '18)The only bit I am still not 100% about is the transferring of the HTB ISA , does this class as a deposit , attracting the 25% bonus on £4000 of it ?

You don't lose any bonus. I'm transferring my HTB ISA next month and the bonus will be credited to my lifetime ISA account for the full amount in April. Eg, if I transfer 6k tomorrow from my HTB ISA to a lifetime ISA, 1500 will be credited in April.

Thank you Mikey1610 for your help with this

Mikey161015 m ago

Skipton


Any other providers worth looking at?

Chiptivo6 m ago

Any other providers worth looking at?



Not for cash, there's no other providers offering them as they're worried about another mis-selling scandal.
There are providers offering stocks and shares lifetime ISAs but these aren't suitable for short term savers and should only be used for people using the lifetime ISA to save for their pension imo.
Edited by: "Mikey1610" 16th Nov

Mikey161013 m ago

Not for cash, there's no other providers offering them as they're worried …Not for cash, there's no other providers offering them as they're worried about another mis-selling scandal.There are providers offering stocks and shares lifetime ISAs but these aren't suitable for short term savers and should only be used for people using the lifetime ISA to save for their pension imo.


Hmmm, bit of a risk hanging on until March in case they withdraw due to demand..

Chiptivo1 m ago

Hmmm, bit of a risk hanging on until March in case they withdraw due to …Hmmm, bit of a risk hanging on until March in case they withdraw due to demand..



Yep, I'm transferring next month

Next tax year, do you have to wait a whole year to get the bonus, or is it paid on a monthly basis?
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