By Emily Nicolle on 1st November 2017
Owners of a Nutmeg LISA can no longer expect to be able to transfer funds from their Help to Buy ISAs before the tax deadline, leaving users adrift.
After the announcement of the new Lifetime ISA on April 6th 2017, those hoping to maximise their government-contributed bonus to their savings with Nutmeg have had their hopes dashed.
The robo-advisor previously announced plans to offer a transfer service for those with HTB ISAs to a Nutmeg LISA before the deadline of April 5th 2018 for the current tax year. As of today, the platform has informed customers that it will no longer be able to deliver on its promise.
Due to the nature of the rules surrounding the first year of the LISA’s availability, savvy consumers will be hit hard by the news if they had planned their saving activity around being able to transfer to a Nutmeg LISA before the 2018 deadline.
With a LISA, consumers are able to save up to £4,000 a year, with 25 per cent bonus on top if you are a first-time buyer using it to go towards a mortgage. Once opened, it cannot be withdrawn from for the first 12 months.
This is significantly higher than the contribution allowances for a Help to Buy ISA, which are £1,200 in the first month and £200 a month thereafter, with the ability to withdraw after 3 months. So although the LISA is less flexible, it offers greater return.
The tip comes in the form of guidance which states that any funds in a HTB ISA contributed before the LISA scheme started can be transferred over to the LISA without affecting the £4,000 contribution limit.
In order to maximise flexibility, consumers who opened a LISA soon after the launch so that the 12-month clock began to tick down will have planned to transfer their HTB ISA funds over shortly before the 2018 deadline, whilst still contributing to their HTB ISA in case they need to withdraw early.
The announcement from Nutmeg now means that many early adopters of its LISA offering will have to seek other options if they wish to combine any ISA savings held elsewhere.
Nutmeg released a statement earlier today. It said: “Our intention had been to offer Help to Buy transfers to our LISA and we’ve been working towards that goal for the first six months of the 2017/18 tax year. We set ourselves a deadline of November 5th to be completely confident we could deliver this for customers but, unfortunately, we are unable to deliver the kind of certainty we were comfortable with.
“It's not the outcome that we'd hoped for, but this gives plenty of time for our customers to make other arrangements and we’re keen to support them by outlining the options as we see them.”
Join AltFi at their fourth annual Australasia Summit to examine the future of lending in Australia. Where we present best practices across, technology, partnerships, open banking, governance, data access, consumer experience, capital markets & funding, the role of government and regulation.