- the help-to-buy individual savings account (ISA);
- the lifetime ISA; and
- stamp duty land tax (SDLT) relief for first-time buyers.
|
Help-to-buy ISA |
Lifetime ISA |
Deadline for opening an account |
30 November 2019 |
Before the saver turns 40 |
Deadline for making savings |
30 November 2029 |
Before the saver turns 50 |
Deadline for claiming the government bonus |
1 December 2030 |
Bonus paid regularly and not subject to a claim |
Minimum age for opening an account |
16 |
18 |
Conditions to be met when opening an account |
UK resident, National Insurance (NI) number, first-time buyer* |
UK resident, NI number |
Form of savings |
Cash only |
Cash or stocks and shares |
Restrictions on other ISA savings |
Cannot have another cash ISA in the same tax year (although steps can be taken if a cash ISA has already been opened) |
Cannot have another lifetime ISA in the same tax year |
Savings limits |
Initial deposit of up to £1,200 and then up to £200 per month |
£4,000 per annum |
Limits on government bonus |
Minimum bonus is £400 (on £1,600 savings) and maximum is £3,000 (on £12,000 savings) |
Up to 100% of the savings can be withdrawn to purchase the first home at least 12 months after the first subscription into the lifetime ISA |
Timing of bonus payment |
On completion of home purchase |
At the end of the 2017/18 tax year and monthly from 2018/19 onwards |
Qualifying property purchases |
The purchaser must be a first-time buyer* and the property purchased must: · be in the UK; · have a purchase price of up to £250,000 (£450,000 in London); · be the only home owned by the purchaser; · be occupied by the purchaser (with a relaxation for members of the armed forces); · be purchased with a mortgage |
The purchaser must be a first-time buyer* and the property purchased must: · be in the UK; · have a purchase price of up to £450,000; · be the only home owned by the purchaser; · be occupied by the purchaser (with a relaxation for members of the armed forces); · be purchased with a mortgage |
Use of bonus/withdrawal |
Bonus (plus any interest on the bonus) applied towards the acquisition of the property only |
Withdrawal used towards defraying the purchase price of the property only |
Can withdrawals be made if a home is not purchased? |
Yes, but no government bonus is paid |
Withdrawals can be made upon reaching the age of 60 or on terminal illness. Other withdrawals are subject to a 25% penalty charge |
*Similar definitions of first-time buyers apply to both forms of ISA. Essentially, a would-be home owner must never have held a residential property interest (including as a beneficiary of a trust) anywhere in the world. See the definitions of ‘First time buyer’ and ‘Residential property owner’ in the Help to Buy ISA Scheme Rules (www.helptobuy.gov.uk/documents/2015/12/scheme-rules.pdf) and ‘First-time buyer’ and ‘Residential property owner’ in the Individual Savings Account Regulations 1998 (SI 1998/1870), as amended by SI 2017/466.
Joint purchasers meeting the eligibility criteria can each open a help-to-buy ISA and/or a lifetime ISA, allowing couples to each qualify for government bonuses, but the purchase price caps apply to the property as a whole.
Trap:
Transferring from a help-to-buy ISA to a lifetime ISA
For the 2017/18 tax year only, funds held in a help-to-buy ISA at 5 April 2017 can be transferred to a lifetime ISA without counting towards the 2017/18 lifetime ISA subscription limit, meaning the 25% bonus is potentially available on the combined balance. Otherwise, any transfers of prior year subscriptions from other ISA types to a lifetime ISA count towards the £4,000 lifetime ISA subscription limit.
SDLT relief for first-time buyers
Since 22 November 2017, SDLT relief is available to first-time buyers on residential property purchases of £500,000 or less. Where the purchase qualifies for relief, the following SDLT rates apply:
Consideration |
Rate |
Up to and including £300,000 |
0% |
£300,001 - £500,000 |
5% |