ISA Subscriptions - Stock & Shares and Lifetime ISA

[Dr_Gonzo]

I've got a normal Stocks & Shares ISA plus a Lifetime ISA (which is also Stocks & Shares).

It was my understanding that you can put money in both each year as long as you don't put in more in total than the annual 20k allowance.

After putting 4k into my Lifetime ISA I called the manager of my normal Stocks & Shares ISA and they have said that as I've already subscribed to one stocks & shares ISA (albeit a Lifetime ISA) I can't make any further subscriptions to my normal stocks & shares ISA - which I don't think is correct.

After reading the HMRC guidance on ISAs I still don't think this is correct as the guidance states "Every tax year you can put money into one of each kind of ISA. You can save up to £20,000 in one type of account or split the allowance across some or all of the other types.".

When listing the four different types of ISA, the HMRC doesn't differentiate whether a Lifetime ISA is cash or stocks & shares - it's just a Lifetime ISA.

Can anyone confirm that exact rules for this subscribing to both a normal stocks & shares ISA as well as a stocks & shares Lifetime ISA?

Thanks,

The Doc

[Smurfsarepeopletoo]

You can split your £20k allowance between different types of ISA's such as a S&S and a Cash Isa, with the lifetime ISA being a S&S ISA, you cant then subscribe to it if you have already subscribed to a S&S ISA, looking at lifetime ISA's they appear to be a normal ISA, but it has a lower annual allowance, and gives you a slightly better return.

[walamai]

This is a very easy one to answer!

"The Lifetime ISA limit of £4,000 counts towards your annual ISA limit. This is £20,000 for the 2020 to 2021 tax year."

https://www.gov.uk/lifetime-isa

[Mr Pointy]

Smurfsarepeopletoo said:

You can split your £20k allowance between different types of ISA's such as a S&S and a Cash Isa, with the lifetime ISA being a S&S ISA, you cant then subscribe to it if you have already subscribed to a S&S ISA, looking at lifetime ISA's they appear to be a normal ISA, but it has a lower annual allowance, and gives you a slightly better return.

I don't think that is correct:

MSE:
The overall ISA limit is £20,000 in the 2020/21 tax year. You are allowed to split this between a LISA (up to the maximum £4,000) and put the remainder in a cash ISA, stocks & shares ISA and/or an innovative finance ISA (for peer-to-peer investing) in the same tax year.

Barclays:
You will be able to have any combination of different ISA types and a LISA at the same time. For example, if you have a cash ISA and an investment ISA already, you can also have a LISA.

You can’t pay in more than the annual ISA allowance however, which in the 2020-21 tax year is £20,000, with a maximum of £4,000 going into the Lifetime ISA.

Hargreaves Lansdown:
Yes, you can open and add money to other types of ISAs (Cash ISAs, Stocks and Shares ISAs or Innovative Finance ISAs) alongside your Lifetime ISA. You’ll only be able to save into one Lifetime ISA each tax year.

You can contribute up to £20,000 across all your ISAs in the 2020/21 tax year, with up to £4,000 in your Lifetime ISA. The government bonus doesn’t count towards the £20,000 overall limit or the £4,000 Lifetime ISA limit.

GOV website:
https://www.gov.uk/individual-savings-accounts/how...
Example
You could save £11,000 in a cash ISA, £2,000 in a stocks and shares ISA, £3,000 in an innovative finance ISA and £4,000 in a Lifetime ISA in one tax year.

[walamai]

Smurfsarepeopletoo said:

looking at lifetime ISA's they appear to be a normal ISA, but it has a lower annual allowance, and gives you a slightly better return.

Not quite. There are several differences compared to a 'normal' ISA, the most appealing of which is "The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year."

There is a 'catch' of course - you can only withdraw from a LISA for three reasons; if you are buying your first home, if you're aged 60 or over, or you are terminally ill, with less than 12 months to live. If you withdraw for any other reason then you pay a 25% 'penalty'. (currently 20% during Covid)

[Dr_Gonzo]

Smurfsarepeopletoo said:

You can split your £20k allowance between different types of ISA's such as a S&S and a Cash Isa, with the lifetime ISA being a S&S ISA, you cant then subscribe to it if you have already subscribed to a S&S ISA, looking at lifetime ISA's they appear to be a normal ISA, but it has a lower annual allowance, and gives you a slightly better return.

I can't see anything on the HMRC guidance that says that this is the case. It only states that the Lifetime ISA is one of the four types of ISAs and doesn't differentiate whether the type of Lifetime ISA affects other subscriptions.

HMRC states: "You can hold cash or stocks and shares in your Lifetime ISA, or have a combination of both."

There's nothing to say that if the Lifetime ISA is Stocks & Shares and you make a subscription to it then you can't subscribe to your normal Stocks & Shares ISA too.

Edited by Dr_Gonzo on Wednesday 17th March 10:56

[theboss]

You can definitely put £4K in your LISA to be invested in shares/funds, and £16K in your S&S ISA to do the same.

Thus you end up with £21k in total after the LISA "top-up" all invested.

The LISA account is ring-fenced as its subject to the withdrawal restrictions.

[timberman]

As has been said you are allowed to pay into one of each type of ISA per financial year up to a max of £20K
(£4K max in a LISA)

i.e. you can have a CASH ISA, a S&S ISA a LISA and even a INNOVATIVE FINANCE ISA and pay into each of them in the same year,

whether the LISA is CASH or S&S is irrelevant as they are classed as a different type of ISA.

My daughter has a S&S ISA and also a S&S LISA, she has been paying into both on a monthly basis for a number of years without issue.

The manager of your S&S ISA doesn't know they're talking about.