Hargreaves Lansdown imposes Lifetime Isa transfer deadline

27 February 2018
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Hargreaves Lansdown has introduced a deadline for customers wishing to transfer a Help to Buy Isa into its Lifetime Isa (Lisa) product.

The DIY investment platform says all applications to transfer must be received by midnight on 6 March 2018, to be processed before the end of the tax year on 5 April.

As Moneywise reported last week, more than 100,000 people have opened a Lifetime Isa since its launch in April 2017.

Many people are expected to transfer Help to Buy Isas as those who opened an account before April 2017 have a one-off opportunity to receive an extra bonus for this tax year only.

Any cash you held in your Help to Buy Isa before 5 April 2017, including interest earned on that cash, can be transferred over to a Lifetime Isa without it counting towards the yearly £4,000 Lisa allowance.

This means you can earn a 25% bonus on this cash, and still have your annual £4,000 allowance available. However, any contributions paid into your Help to Buy Isa in the 2017/18 tax year will count towards this year’s Lisa limit.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, says: “Transfer times are starting to creep up as the 5 April approaches, so we have taken the precaution of introducing a deadline of 6 March.

“The Lisa has a number of advantages over the Help to Buy Isa, so a transfer is often in your best interests. If you complete it before midnight on 5 April, special rules for this tax year make it particularly rewarding.

“However, if you miss this deadline, there are three benefits you’ll miss out on: you won’t get up to £1,100 in bonuses; you’ll use up your allowance for 2018/19; and you may be left with more Help to Buy cash to switch next year.

“Not only does this mean turning down free money from the government, it also means that instead of ending 2018/19 with up to around £12,400 in your Lisa (and a bonus of £3,100), you’ll have a maximum of around £4,000 and a bonus of £1,000. Take advantage of the cold snap, stay in and complete your transfer forms before it’s too late.”

What are other Lifetime Isa providers doing?

Skipton Building Society, the only provider to offer a cash Lifetime Isa, had set a deadline of 1 March but has extended this to 2 March due to the poor weather conditions across much of the UK.

Investment platforms have also issued deadlines. The Share Centre says applications must be received by 29 March while Foresters Friendly Society says its transfer process can take 30 days, meaning applications should be made by 6 March.

AJ Bell and OneFamily have set no deadline but both are encouraging customers to start the process as soon as possible. Nutmeg does not accept Isa transfers so has no deadline in place.

What is a Lisa?

The Lisa is designed to help first-time buyers and people starting to save for retirement. When you pay into a Lisa, the government will top up your deposits with an annual 25% bonus up to a yearly maximum of £1,000.

However, you can only open one if you are between 18 and 39 years old.

As with other Isas, you can choose a Cash Lisa or an investment Lisa and once your money is in a Lisa it can grow tax-free.

Comments

In reply to by anonymous_stub (not verified)

All firms have to set a 6th March deadline as they can only work to the maximum date set by the FCA on the firm transferring the HTB ISA, this being 30 days. How can a LISA provider respond to your request for a deadline with 'as soon as possible'? A question you might wish to probe those that responded in this way on a bit further. Are they seeking to mislead customers?

In reply to by anonymous_stub (not verified)

AJ Bell tell me the interest earned this year - on previous year HTB ISA contributions - does count towards the current year limit!

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