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How do Help to Buy ISA’s work?
Top 10 facts and rules…
- Its only available to ‘First Time Buyers’
- ‘First Time Buyers’ can only have one Help to Buy ISA with one provider
- You can pay in £1,000 when you open the account and then save a maximum of £200 per month
- The maximum government bonus is £3,000 (but you can lower amounts of bonus if you have less than £12,000)
- The scheme will run for 4 years from the date it opens (Autumn 2015)
- Couples can have a Help to Buy ISA each which means if they don’t want to wait 4 years could save £12,000 in 25 months where as a single saver would need 55 months
- Unlike ISA’s where you open one per year, the Help to Buy ISA will continue for 4 years
- You can withdraw funds but if its not to buy a home then you won’t get the bonus
- More than 100,000 homes have now been bought with government backed schemes
- You will be able to get them at banks and building societies
Money Saving Expert has some useful Q&A including this one….
A first-time buyer is someone who does not and has never owned an interest in a residential property, either inside or outside the UK.
Many people have said “I owned a property previously but now rent”, “I have a shared ownership property” or “I have inherited a property” can I still open a Help to Buy ISA? And the answer is NO – you have to be a first-time buyer to open one.
steve@bicknells.net
Are you waiting for a New ISA?
From 1st July 2014, individual savings accounts (ISAs) will be reformed into New ISAs (NISAs) with an annual limit of £15,000.
You can invest your NISA in Cash, Stocks and Shares or in any combination.
The limits for Junior ISAs and Child Trust Funds have already been increased from £3,700 to £4,000.
From July, restrictions on corporate bonds and gilts will have the 5 year rule removed allowing you to invest in short dated securities such as Retail Bonds.
There are plans to enable Peer-to-Peer loans to be held in NISA’s but that’s still in the consultation stage.
Between now and July the most you can invest in an Cash ISA is £5,940.
So are you waiting for a New ISA?
steve@bicknells.net
Save for Children but save tax where you can
Many parents, grandparents and other family members like to save for children but are you paying tax on the interest?
The £100 Rule
HMRC Form R85 is used to claim interest tax free but what you might not realise is that despite your child having a personal tax allowance from birth there is a maximum of £100 per year which can earned tax free in interest and dividends earned on parental/family gifts.
So for 2 parents that’s £200 plus grandparents have the same exemption, but if the interest exceeds the limit even by a small amount, the exemption is lost and whole amount of interest becomes taxable.
Junior ISA
Children can have an ISA in their name, the maximum annual contribution limit is £3,720 (2013/14) in cash or shares but the money will be locked in until the child is 18. The £100 rule doesn’t apply to ISA’s.
Pension
Yes, crazy as it might sound your baby can start a pension plan.
You can receive 20% tax relief even if you don’t pay tax. The maximum you can contribute is £3,600 gross – a payment of £2,880 to which the taxman adds £720. This is the case even for people who don’t pay tax, such as children and non-earning spouses.
steve@bicknells.net
Business Accountant 