Investment ISAs put your capital at risk & you may get back less than you originally invested
Help to Buy ISAs are ISA accounts designed to help you save for your first house deposit.
The Help to Buy ISA Scheme has now been replaced by the Lifetime ISA, so you can no longer open a new Help to Buy ISA.
However, you can keep topping up an existing Help to Buy ISA until November 2029.
Help to Buy Bonus:
HMRC adds 25% to the value of your Help to Buy ISA when you withdraw it to fund your house deposit.
It must be used for:
You can also only save a maximum of £200 each month into a Help to Buy ISA, and you can only save a total amount of £12,000 in your ISA, giving you a government bonus of £3,000.
Lifetime ISA rules are similar to Help to Buy ISA rules, but there are a few main differences:
Yes, you can.
You can also transfer normal Cash ISAs and Stocks and Shares ISAs into a Lifetime ISA. However, you are still limited to the £4,000 Lifetime ISA allowance which includes both transfers and contributions.
To transfer your Help to Buy ISA into a Lifetime ISA you’ll first need to identify a Lifetime ISA provider to invest with.
Once you’ve decided on who to open a Lifetime ISA with, you can do so either by contributing money with a debit card or submitting a transfer form.
A transfer form can be used to transfer both normal ISAs and Help to Buy ISAs into a Lifetime ISA, and your LISA provider will provide you with the form.
Once you’ve submitted your Help to Buy ISA transfer form, your LISA provider will carry out your transfer and notify you when it is complete.
When the ISAs reach your Lifetime ISA, the government bonus of 25% will be added in the following month.
There are a few main reasons you should consider transferring your Help to Buy ISA into a Lifetime ISA:
No. You can switch providers with an ISA transfer if you wish. You can also contribute to other ISA providers in separate tax years.
Yes, any dividends, capital gains or withdrawals will be 100% tax-free from a LISA.
No. Your Lifetime ISA allowance counts towards your total annual allowance, so if you have contributed £4,000 to a LISA then you can only contribute a further £16,000 to a standard ISA.
Yes, you can open a LISA if you already have a Cash ISA or Stocks and Shares ISA.
You will be charged more than the bonus you get if you make a withdrawal against the permitted LISA rules. This is because 25% of your withdrawal after the added government bonus will total more than 25% of your original contribution.
You can also lose money in a Stocks and Shares LISA if your investments fall in value.
Yes, if you do not use all of your LISA value for your first home, then you can take the remainder at age 60 without being charged.
You cannot transfer a Lifetime ISA to a standard ISA as this would be a way of avoiding the 25% charge for unsolicited withdrawals.
For a LISA, you will be charged 20% of your withdrawal if it is not for a deposit on a first home or over the age of 60. This is to counteract the 25% bonus that HMRC will have initially added.
No, you can only contribute to your own LISA for tax purposes.
£4,000 per person for the 2021/22 tax year.
You can use LISA savings for your first home. If you own another home or have done in the past, either jointly or solely, then you are not eligible. This includes any property you have inherited.
The property you buy can also be valued at no more than £450,000.
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.
