How to Claim a £1100 ISA Bonus Using Little Known Loophole
The end of the tax year is a little over 2 months away, on April 5
Lifetime ISAs were launched last year and
The transfer rules are as follows:
- Help to Buy ISAs were last valued on 5 April 2017.
- This value, plus any interest added since, can be transferred to Lifetime ISA allowance at any time over the 2017/18 tax year.
- The value of the Help to Buy ISA will not count towards the £4000 Lifetime ISA annual savings limit.
- A 25% bonus will be paid out on the value of the transfer.
- Only one transfer from a Help to Buy ISA to Lifetime ISA can be made without it being considered within the LISA’s £4000 annual allowance.
- Contributions made into a Help to Buy ISA after 5
thApril 2017 WILL count towards the annual Lifetime ISA allowance and must be transferred to a Lifetime ISA.
As well as taking advantage of the top up bonus, there are other pluses to transferring a Help to Buy ISA to a Lifetime ISA. The government bonus on Help to Buy savings is only received after a deposit is made on a first property. The 25% bonus is paid on monthly LISA contributions so goes towards compounding interest or returns. While Help to Buy ISAs are cash ISAs only, LISAs can also be used for investing online in funds, equities and bonds if held with
There is one caveat though. Anyone planning on buying a first property in the next 12 months should NOT transfer their Help to Buy Isa into a LISA. A Lifetime ISA needs to have been active for 12 months before the first bonus is paid, on the entire year’s savings. After that point bonuses are paid on monthly contributions. So no bonus will be received on LISA holdings if the account is less than a year old.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.