You can no longer open a new Help to Buy ISA – it closed to new applications in 2019. But, if you already have one, you could save a bigger deposit for your first home by transferring it to a Lifetime ISA! Not only can you save much more each tax year, you’ll earn the government bonus upfront as you save. Here’s what you need to know about transferring to a Lifetime ISA – plus, how to transfer easily with Moneybox.

Heads up – the deadline to request to transfer a Help to Buy ISA to a Moneybox Lifetime ISA in the 2023/24 tax year is 8th March 2024.

 

What’s the difference between the Help to Buy ISA and Lifetime ISA?

Both products offer a 25% government bonus for first-time buyers, but that’s where their similarities end. Here’s a quick breakdown of the key differences.

 

Help to Buy ISA Lifetime ISA
Max monthly savings £200 per month No monthly limit – just the annual limit
Max annual savings £2,400 per tax year £4,000 per tax year
Max annual bonus £600 per tax year £1,000 per tax year
Total max bonus £3,000* £33,000**
When you get the bonus On completion day (when you buy your first home) Upfront, as you save
(so you can earn interest/gains on the bonus)
Max property price £250,000 (£450,000 in London) £450,000 (anywhere in the UK)
Savings or investments? Cash only Choose between Cash or Stocks & Shares
When you can use the funds Once you’ve saved £1,600+ / it’s been open for 3+ months Once it’s been open for 12+ months (from your first deposit)
What you can use the funds for A qualifying first home purchase A qualifying first home purchase, retirement, or both
Withdrawal restrictions Withdraw anytime, penalty-free – but you won’t get the govt. bonus A 25% govt. withdrawal charge applies if not using the funds for your first home (under £450k) or retirement – you’ll get back less than you put in


*You only get the 25% government bonus on the first £12,000 you save in a Help to Buy ISA.

**This is the maximum amount you could earn as a government bonus if you opened one at age 18 and earned the full £1,000 every year until age 50.

Remember: if you opt for the S&S LISA, all investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest.

 

Why transfer a Help to Buy ISA to a Lifetime ISA?

  • Save more and build a bigger deposit – With a Lifetime ISA, you can save almost double the amount per tax year than a Help to Buy ISA allows you to – up to £4,000 every tax year. So, you can save the deposit for your first home faster!
  • Earn more bonuses and get them upfront – Unlike the Help to Buy ISA, you don’t have to wait until the day you buy your first home to get the government bonus. You’ll earn it every time you save! So, you’ll have the chance to earn interest or gains on top. Over the years, these pounds can really add up.
  • There’s more free money on the table – The maximum bonus you could earn with a Lifetime ISA is £33,000 (see above), compared to just £3,000 with a Help to Buy ISA.
  • Save in a way that suits you, with no monthly caps – With a Moneybox Lifetime ISA, you can save weekly, set up a monthly payday boost, or make an instant bank transfer if you prefer to save lump sums. The Help to Buy ISA only lets you save monthly, and it’s capped at £200 per month.
  • Choose between Cash or Stocks & Shares – Earn a market-leading interest rate on your first home savings with our Cash Lifetime ISA, or grow your deposit over the long term by investing with our Stocks & Shares Lifetime ISA. Help to Buy ISAs don’t offer the option to invest.

 

Think before you transfer

  • If you’ve got more than £4,000 in your Help to Buy ISA – Transfers count towards your £4,000 Lifetime ISA allowance, so if you’ve got more than this amount saved in a Help to Buy ISA, you’ll need to split your transfer over multiple tax years.
  • If you’re buying a home within the next year – Keep an eye on your ‘LISA clock’. To use your LISA funds to buy your home (and avoid the 25% withdrawal charge), the rules state it has to be open for 12 months. This ‘clock’ starts ticking from the date of your first deposit. If you want to buy a home, but are not sure when, you can open a Moneybox Lifetime ISA with as little as £1. Already had your LISA open for more than 12 months? Don’t worry, transferring a Help to Buy ISA won’t affect your LISA clock and you can buy your home instantly, if you want to.
  • If you’re not sure if you’ll buy a home, or it’ll be over the price cap – You’re likely to be better off sticking with the Help to Buy ISA, as you won’t pay the penalty charge if you need to withdraw.
  • If you’re aged 40 or over – A Lifetime ISA can’t be opened after you turn 40, so if you’re nearing this age, don’t miss the boat! If you opened a Lifetime ISA before 40, you can still transfer an ISA after your 40th birthday.

 

How to transfer a Help to Buy ISA to a Moneybox Lifetime ISA

Transferring couldn’t be easier, and you can do it all in the Moneybox app. Say goodbye to paper forms!

  1. If you haven’t already got one, open a Moneybox Lifetime ISA (choose between a Cash Lifetime ISA or a Stocks & Shares Lifetime ISA).
  2. Head in-app and request your transfer at Settings > Transfer in an existing ISA > Lifetime ISA.
  3. Our Support team will send you an exciting email when your transfer has landed in your Lifetime ISA – this can take up to 30 days.
  4. About a month later, you’ll receive the government bonus on the money you’ve transferred in!

Questions? Speak to our Support team via the in-app chat or email support@moneyboxapp.com.

 

What else should I know about transferring?

  • Transferring a Help to Buy ISA into a Lifetime ISA will count towards your £4,000 Lifetime ISA allowance, but not your overall £20,000 ISA allowance, as the money was already in an ISA.
  • You can save into both a Help to Buy ISA and a Lifetime ISA if you’re eligible, but you’ll only be able to use the bonus from one product towards your first home.
  • If you use the bonus from a Help to Buy ISA, you can keep your Lifetime ISA open to save for retirement and you’ll still get the Lifetime ISA bonus.

 

A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement. This means you’ll get back less than you’ve put in.

Tax treatment depends on individual circumstances and is subject to change.