Can I transfer a Help to Buy ISA to a Lifetime ISA?

This guide covers how the two accounts compare, what the rules are, and how to make the switch if you decide it's right for you.

Is a Lifetime ISA worth considering over a Help to Buy ISA?

For first-time buyers, a Lifetime ISA could offer more potential. But it will depend on your circumstances.

• The Help to Buy ISA closed to new applicants in November 2019, so if you still have one, you can only continue saving into it until November 2029 and claim the government bonus until November 2030. You can contribute up to £200 per month, with a maximum total contribution of £12,000, and receive a 25% bonus up to a lifetime maximum of £3,000.
• A Lifetime ISA works differently. You can contribute up to £4,000 per tax year and receive a 25% government bonus on everything you put in up to £1,000 per tax year. 

If you want a more detailed breakdown of how the two schemes compare side by side, you can read our guide on the Help to Buy ISA vs the Lifetime ISA. 

A few more differences are also worth understanding:

• Property price cap: Help to Buy ISAs can only be used on properties up to £250,000 (£450,000 in London). Lifetime ISAs have a higher cap of £450,000 across the UK.
• How the bonus is applied: The Help to Buy bonus is paid after completion, not at exchange, and it cannot be used for your deposit. The Lifetime ISA bonus is added to your account as you go and can be used toward your deposit.
• Age requirements: You must be between 18 and 39 to open a Lifetime ISA. Once open, you can keep making contributions until you turn 50.

However, there are potential drawbacks to transferring to a Lifetime ISA, depending on your individual circumstances, which we’ll cover later.

Why transfer a Help to Buy ISA to a Lifetime ISA?

Higher contribution limit

The Help to Buy ISA allows contributions of £200 per month (plus an initial £1,200 in the first month). A Lifetime ISA allows up to £4,000 per tax year, that's around £333 per month. 

Larger bonus potential

Because the contribution limit is higher, the Lifetime ISA bonus may be worth considerably more over time. The maximum Help to Buy bonus was £3,000 in total. A Lifetime ISA may deliver up to £1,000 per tax year, provided you contribute the full Lifetime ISA allowance every year.

Higher property price cap

Savings beyond a first home

A Lifetime ISA isn't only for buying property. If you don't end up purchasing, the savings and bonus can be used when you turn 60, without penalty. With a Help to Buy ISA, the government bonus can only ever be applied to a first home purchase.

Can I have both a Lifetime ISA and a Help to Buy ISA?

Yes. You can hold both accounts at the same time, and there's nothing to prevent it.

What you cannot do is use both bonuses toward the same property purchase. When you buy, you'll need to choose which accounts' bonus to apply. 

You’ll also need to stay within the £20,000 annual ISA allowance across all your ISAs. This includes up to £4,000 per year into a Lifetime ISA, as well as any contributions to a Help to Buy ISA, which has its own monthly limits (£200).

Buying with a partner

If you're planning to buy with another first-time buyer, transferring to a Lifetime ISA can be particularly beneficial.

You can each hold a Lifetime ISA and both use your government bonus toward the same purchase. This means up to £1,000 per year each in bonuses, provided you both contribute the full £4,000 annual allowance.

This is similar to Help to Buy ISAs, where both buyers can claim a bonus, but the higher £450,000 property price limit with a Lifetime ISA can make it more suitable in higher-value areas.

It’s worth noting that the £450,000 limit applies to the property as a whole (not per person), and both buyers must be first-time buyers to use their Lifetime ISA funds.

For more details on how this works in practice, see our guide on using two LISAs to buy a house.

Can I take money out of my Help to Buy ISA?

Yes. You can withdraw from a Help to Buy ISA at any time, and there's no penalty for doing so.

The government bonus is only paid at completion of a qualifying property purchase. So, if you take the money out for any other reason, you simply don't receive the bonus, but you keep everything you personally saved and any interest earned.

This is an important difference from the Lifetime ISA. Because Help to Buy ISA withdrawals carry no charge, there's less risk in holding one if your plans aren't certain yet. If you transfer to a Lifetime ISA and your circumstances change, the 25% government withdrawal charge applies.

Important things to consider before transferring your Lifetime ISA 

Here are a couple of important things to consider before you begin your transfer. 

The Help to Buy bonus is forfeited on transfer

When you move funds from a Help to Buy ISA into a Lifetime ISA, you will not receive the Help to Buy government bonus on the amount transferred. 

Instead, the transferred funds will qualify for the Lifetime ISA bonus. If you were counting on the Help to Buy bonus, it's worth factoring this in before making the switch.

The 12-month rule 

A Lifetime ISA must have been open for at least 12 months before you can use it, including the bonus, toward a property purchase.

If you transfer your Help to Buy ISA into a Lifetime ISA and buy a property within that 12‑month period, you won’t be able to use the Lifetime ISA funds without paying a withdrawal penalty.

In practice, this is because HMRC would treat the withdrawal as not meeting the Lifetime ISA rules for a qualifying first-time purchase. As a result, the 25% withdrawal charge would apply, meaning you’d lose the bonus and a portion of your own savings.

How to transfer your Help to Buy ISA to a Lifetime ISA

The process is easier than many people expect, but there are certain steps you need to be aware of.

Here’s how the transfer works:

1. Check you're eligible to open a Lifetime ISA (if you don't already have one)

You need to be between 18 and 39 to open one. If you're already 40 or over, this option isn't available.

2. Open a Lifetime ISA with a provider that accepts transfers

Not all Lifetime ISA providers accept transfers from Help to Buy ISAs, so check before applying. 

3. Check how much you have saved

The full amount you transfer counts toward your £4,000 annual Lifetime ISA contribution limit. If your Help to Buy ISA balance is over £4,000, you won't be able to move everything across in one go.

The remainder would need to be transferred in the following tax year, or over as many tax years as needed to bring the full balance. It's worth factoring this in before you start, particularly if you're planning to buy in the next couple of years.

4. Initiate the transfer through your new provider

This step matters. If you withdraw money from your Help to Buy ISA and pay it into a Lifetime ISA yourself, it’s treated as a new ISA contribution.

This means it counts towards both your £4,000 Lifetime ISA allowance and your £20,000 overall ISA allowance for the tax year. Instead, you should request an ISA transfer through your new Lifetime ISA provider. They’ll arrange the move directly with your Help to Buy ISA provider.

When done this way, the funds are treated as an official transfer, not a new contribution. That means the amount moved does not count towards your £20,000 overall ISA allowance for the year.

However, it still counts towards your £4,000 Lifetime ISA allowance, as this is the maximum that can be paid into a LISA each tax year, including transfers in.

5. Confirm the transfer terms with your existing provider

Check whether your Help to Buy ISA provider charges any exit fees or requires a notice period before transferring. Many don't, but it's worth confirming. Transfers typically take between 15 and 30 working days.

6. Start making contributions

Once the transfer completes, you can contribute up to £4,000 per tax year, minus whatever amount you’re transferring in from your Help to Buy. The 25% government bonus is applied monthly by HMRC.

Ready to make the switch?

Transferring a Help to Buy ISA to a Lifetime ISA isn’t right for everyone, but for some, it could allow them to save more each year, receive a larger government bonus over time, and have more freedom in the type of property they can buy.

You must make sure the timing works for you. If you're planning to buy within the next 12 months, it may be worth holding off.

At Unity Mutual, our Lifetime ISA* is designed to help first-time buyers save tax-efficiently, with a variable interest rate currently at 4%.  If you'd like to speak to our friendly team about opening a Lifetime ISA or have questions about an existing account, you can call us on 0161 214 4650.

Please note we can't provide individual guidance. If you're unsure whether transferring is the right decision for your circumstances, you may want to consider speaking to a regulated financial adviser at unbiased.co.uk.

*Terms and Conditions apply.