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Help to buy ISA

The help to buy ISA was launched on the 1st December 2015 and became an instant hit with those seeking to move onto the property ladder. By the end of December there had been over 142,000 accounts opened, with around £120m invested.

Aimed at the first time buyer market, the help to buy ISA offers a tax efficient method to save towards the cost of purchasing a property with an added bonus of 25% from the UK government. Currently investors have until 30th November 2019 to take advantage of the scheme and must ensure any bonuses due are claimed prior to the 1st December 2030.

As Independent Financial Advisers, we are often asked about help to buy ISAs amongst other things, so we have put together this 11 point list of common queries to help our clients decide if a help to buy ISA is suitable for their needs.

The common points to be aware of are:

• They can only be held by first time buyers.
• Contributions are limited to £200 per month, with exception being the first month in which an additional £1,000 contribution can be made.
• Any money withdrawn from the help to buy ISA cannot be replaced.
• A different cash ISA cannot be subscribed to within the same tax year unless the ISA manager is offering a portfolio approach.
• You can transfer funds from one help to buy ISA to another and transfer funds into a help to buy ISA from a non-help to buy ISA, subject to the contribution limits.
• The minimum bonus payable is £400 with a maximum of £3,000 available.
• You can only claim one bonus per investor, which is based on the value of the account at closure. The investor must also claim the bonus within 12 months of the account closing.
• The entire bonus MUST be used towards the house purchase, which has be purchased with a mortgage.
• The property must be UK based and is subject to a price cap of £450,000 in London and £250,000 elsewhere.
• The property must be your primary residence and not a buy to let. The investor must also be named on the title deeds to the property.
• Although subscriptions count towards the investor's cash ISA allowance, they are still able to maximise their full ISA allowance by contributing to a stocks and shares ISA in the same tax year.

To find out more about the help to buy ISA contact us on 0121 325 6950 or head over to www.helptobuy.gov.uk

Adam Caga