September 22nd, 2015
First time buyers Help to Buy ISAs
First-time buyers will soon be able to get £3,000 help to buy a property.
From autumn 2015 the new Help to Buy ISA scheme launches, whereby individuals aged 16 and over can contribute up to £200 per month until April 2020 towards their first home and the government will increase that saving by 25% – that’s a £50 bonus for every £200. When they first open it individuals can save an additional £1,000, meaning that they can save £1,200 in the first month and this contribution will have a £300 bonus added to it, provided they continue to save and reach the minimum contribution for the bonus to apply.
The minimum bonus payable is £400 but to obtain that account holders will need to have saved £1,600 and the maximum bonus is £3,000 whereby they will need to have saved £12,000.
Accounts are limited to one per person for the whole of saving term until April 2020 (unlike Cash ISAs where a new one is opened each tax year following new contributions) but those buying together can both receive a bonus meaning a couple could receive a maximum bonus of £6,000 between them.
The bonus will be calculated and paid when the account holder buys their first home. A voucher for the bonus will be sent straight to the mortgage lender and therefore account holders will be unable to receive the bonus unless they buy a home. This will also mean that they will be unable to earn interest on the bonus as the cash will never be directly in the account to earn it.
It is important to note that individuals are unable to contribute to a Help to Buy ISA and a Cash ISA during the same tax year. This means that if you have already contributed to a Cash ISA since 6th April 2015 you will be unable to open a Help to Buy ISA when they launch and will have to wait until the next tax year to do so, therefore potentially missing out on a few months worth of contributions.
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Written by: Kay Crooke – Practice Manager, Prosser Knowles Associates Limited
Prosser Knowles Associates Limited is Authorised & Regulated by the Financial Conduct Authority. The value of your investment can go down as well as up and you may not get back the full amount invested. The Financial Conduct Authority does not regulate Taxation and Trusts. The information in this document does not constitute advice or a recommendation for any product and you should not make any decisions on the basis of it. Your home may be repossessed if you do not keep up repayments on your mortgage.