Investments  

A leg up the ladder

A leg up the ladder

Help to Buy: Isas were launched on 1 December.

A Help to Buy: Isa is an Isa for first-time buyers whereby the government will pay a tax-free bonus of 25 per cent on savings towards the purchase of the saver’s first home, subject to minimum and maximum amounts.

The Tax Incentivised Savings Association welcomes this initiative as it will help young people get on the property ladder. It has proved popular with investors, with 142,000 accounts opened in December, representing £120m. That is equivalent to 1.4 per cent of all Cash Isas opened in the last tax year.

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The Help to Buy: Isa is a Cash Isa, subject to existing Cash Isa rules, but there are also additional rules specific to the Help to Buy: Isa and for claiming and using the government bonus.

Help to Buy: Isas will only be available until 30 November 2019. Savings can still be made after that date, but the scheme has an end date of 1 December 2030, by which time any bonus must be claimed.

Not all Isa managers offer a Help to Buy: Isa.

The lay points to be aware of are:

Isa rules

■ Help to Buy: Isas can only be held by first-time buyers.

■ Only one Help to Buy: Isa can be held at any time (if the investor has previously held a ■ Help to Buy: Isa and closed it without claiming a bonus they can open a new one).

■ A maximum of £200 can be paid into the Help to Buy: Isa each month (a month for these purposes is defined as a whole calendar month, from the first to the last day of that month).

■ An extra £1,000 can be paid into the Help to Buy: Isa in the month it is opened (this means a total of £1,200 can be saved in first month, made up of the £1,000 opening payment plus the £200 monthly payment).

■ Any money withdrawn cannot be replaced without counting towards the payment limits (the flexible Isa rules will not apply to the Help to Buy: Isa).

■ There is no limit to the total amount that can be saved over time from payments made into a Help to Buy: Isa but the bonus claim is subject to minimum and maximum amounts.

■ A different Cash Isa cannot be subscribed to in the same tax year as a Help to Buy: Isa (unless the Isa manager is offering a portfolio approach which allows for multiple products to be held in one Cash  Isa).

Isa transfers

■ A Help to Buy: Isa can be transferred to another Help to Buy: Isa or to a non-Help to Buy: Isa.

■ Money can be transferred into a Help to Buy: Isa from a non-Help to Buy: Isa but it is subject to the maximum payment amounts (£1,200 in the month of opening and £200 per month thereafter) and to existing Isa rules.