Help to Buy ISA: what to do with an old account

The Help to Buy ISA (H2B ISA) closed to new applicants on 30 November 2019, but many accounts remain open: you can keep paying in until 30 November 2029 and claim the bonus until 1 December 2030. The scheme allowed first-time buyers to save up to £200 per month (plus an initial £1,000 deposit) and receive a 25% government bonus on the balance when buying a property. The maximum bonus was £3,000 on £12,000 of savings. However, many account holders are confused about what to do with their H2B ISA in 2026 — whether they should keep it, transfer to a Lifetime ISA (LISA), or close it. The rules are complex, and the deadlines are now in sight. If you still have a H2B ISA, you have several options, each with different implications for your house deposit timeline and bonus eligibility. The key decision point is whether you plan to buy a property within the next 12 months or later.

If you plan to buy your first home within the next 12 months, keeping your H2B ISA and claiming the bonus is likely your best option. The process: you can continue contributing up to £200 per month (until 30 November 2029) until you're ready to claim the bonus. When you find a property, your solicitor will apply for the bonus during the conveyancing process. The bonus is paid directly to your solicitor, not to you, and must be used towards the purchase. Important limitations: the property price cap is £250,000 (£450,000 in London). If your property exceeds this, you cannot claim the bonus. The bonus must be claimed at least 12 working days before completion. You cannot claim the bonus if you've already owned a property anywhere in the world. The bonus is 25% of your balance at the time of claim, from a minimum of £400 (you need at least £1,600 saved) up to a maximum of £3,000. If you have £10,000 saved, you'll receive £2,500. The last date to claim is 1 December 2030. The bonus is tax-free and doesn't count towards your annual ISA allowance. The main advantage of the H2B ISA over the LISA is the lower monthly contribution limit (£200 vs £4,000 annually for LISA) which may suit those saving smaller amounts. However, the LISA's higher annual limit and ability to claim the bonus after just 12 months (vs H2B ISA's immediate bonus eligibility) often makes it superior for most buyers.

For first-time buyers not planning to purchase within the next 12 months, transferring from a H2B ISA to a Lifetime ISA is usually the optimal strategy. The LISA offers several advantages: a higher annual contribution limit (£4,000 vs £2,400 for H2B ISA), the ability to contribute lump sums (vs H2B ISA's £200/month limit), a higher property price cap (£450,000 anywhere in the UK vs £250,000/£450,000 London for H2B ISA), and the same 25% government bonus. The transfer process is crucial: you must use the formal ISA transfer process, not withdraw and redeposit. Transferring preserves the tax-free wrapper, but money moved from a H2B ISA into a LISA still counts towards the £4,000 annual LISA limit, so you can move up to £4,000 per tax year. If your H2B ISA balance exceeds £4,000, you can transfer the remainder in later tax years. If you keep both accounts, you can only use the bonus from one of them towards the same home, so check with your provider before splitting your savings. The LISA must be open for 12 months before you can use it for a property purchase, so transfer early. The main disadvantage: LISA withdrawals for non-property purposes before age 60 incur a 25% penalty (which effectively means you lose the bonus plus some of your own money). H2B ISA withdrawals are penalty-free, though you lose the bonus on withdrawn amounts. Also note that the government has consulted on replacing the LISA with a new First Time Buyer ISA (the consultation closed in August 2026 and no launch date has been confirmed); for now, LISAs can still be opened and paid into.

If you're no longer planning to buy your first home, or if you've already bought a property (making you ineligible for the bonus), you can withdraw your H2B ISA savings at any time. The process is simple: contact your provider and request a withdrawal. The money will be transferred to your linked bank account, typically within 3-5 working days. Important: you will not receive the government bonus on withdrawn funds. The money you withdraw is your original savings only. If you've already received a bonus on previous contributions (unlikely unless you previously claimed on a property purchase), you don't need to repay it when withdrawing remaining funds. Tax implications: H2B ISA withdrawals are tax-free because the money was saved within an ISA wrapper. Once withdrawn, you can use the money for any purpose — paying off debt, investing, emergency fund, or other savings goals. If in doubt about your eligibility, contact your provider or a financial adviser before withdrawing.

The 2026/27 tax year ends on 5 April 2027. If you plan to transfer to a LISA, moving £4,000 before then uses this tax year's LISA allowance, and you can move another £4,000 from 6 April 2027 using next year's. For example: transfer £4,000 in March 2027 and the government adds £1,000; transfer another £4,000 in April 2027 and it adds another £1,000. The LISA bonus is paid into the account monthly, so that's £2,000 in bonuses within a few weeks, versus £1,000 if you miss the 5 April deadline. If you're keeping your H2B ISA, ensure you've maximised your contributions for the current tax year. You can contribute up to £200 per month (the larger first-month payment of up to £1,200 only applied when the account was opened). The key is consistency: £200/month adds up to £2,400 per year, plus the 25% bonus (£600) when you buy. That's £3,000 towards your deposit annually from this single account. Combined with other savings, it can significantly accelerate your timeline.

Mistake 1: assuming the account will close automatically. You can't pay into a H2B ISA after 30 November 2029, and the bonus must be claimed by 1 December 2030. After that the account becomes an ordinary Cash ISA with no bonus. Check the interest rate too, as some providers pay less on H2B ISAs than on their best Cash ISAs. Mistake 2: withdrawing to fund a LISA deposit. This uses your annual LISA allowance and may push you over the £4,000 limit if you also make regular contributions. Always use the formal transfer process. Mistake 3: forgetting about the account. Many people have moved banks, changed addresses, or simply forgotten they have a H2B ISA. Check old bank statements or contact providers you've used in the past. The Unclaimed Assets Register can help locate forgotten accounts. Mistake 4: buying a property over the price cap. The £250,000 limit (£450,000 London) is strict. If your purchase exceeds this by even £1, you forfeit the entire bonus. Research property prices in your target area before committing to the H2B ISA path. Mistake 5: not telling your solicitor. Your conveyancer must apply for the bonus — they won't know to do so unless you tell them. Provide your H2B ISA details early in the process. Mistake 6: contributing after exchanging contracts. You cannot add funds to your H2B ISA after you've exchanged contracts on a property. The cutoff is the date you legally commit to the purchase.