Question Time: Help to Buy ISA v LISA? Sell shares each year to use Capital Gains allowance? Broken broadband compensation

0:28This would be absurd, but sometimes absurd things happen. absolutely anything and everything within reason. This week, you've asked me, I want to buy my first home. Would I be better to move the money I've got from a help to buy ISA into a lifetime ISA? Is it best to sell shares each year to use up my annual capital gains tax allowance? My broadband's broken. It's a nightmare. I work from home. What rights do I have? Can I leave my mobile contract if they've hiked the bills? And your final question, what's my dream golf four ball? Play the theme tune.

1:16Hello and welcome to the Question Time episode of the pod and let's bring on he who must be obeyed, the curator of questions himself, Mr. Matt Burnham. Hello. Podcast producer Matt, for those who don't know. Podcast producer Matt. Or yeah, curator of questions. Curator of questions. I think you were objected at first. I think you're growing into it. I don't mind it. It's quite nice. I've got a little what's it called? Nickname. Yeah. And you could put the letters after your name. Someone has emailed in and already done that, so they're one step ahead of you. Matt Burnham, C-O-Q. It's beautiful.

1:53Beautiful. Let's move swiftly on and start, I'm sure, as the format demands, with a read. Of course, and I picked a good one for you. It's from Felice. She says, hi, both. Nobody has been able to help me with this. Well, let's see if we can. Yet. A challenge to the curator of questions, she says. We already know that generally lifetime ICAs are better for first-time buyers looking to save for a deposit because they're eligible to be used for a higher value home, even outside of London. For those of us who put a quid in a help to buy account before they were ended and have been steadily adding away over the years since, is it worth getting the money we've saved out and putting it into a lifetime ISA instead?

2:36Will we face a penalty when we do that because the withdrawal is not for the purchase of a home? And at what point would that penalty be offset by the amount we can gain from the government bonus on the money if we switch? Hope it's not too much of a headache to answer. Not a headache at all. It's a lovely little technical question that I'm very happy to get my teeth into. So, for those who don't know, the help to buy ISA was the predecessor of the Lifetime ISA. You are perfectly entitled to have both of them, but you can only use one of them to get the 25 % bonus you get on savings towards your first house.

3:12So you can have money in both of them, because especially the lifetime ISA can also be used towards later life savings money that you can take out once you're aged over 60. Now, you said in your question, I think, Felice, that lifetime ISAs are better for first time buyers looking to save for a deposit. It's not that clear cut. They both have pros and cons. In brief, the big pro of the lifetime ISA is you can put more money in each year, which means, of course, then if you go and get your qualifying house, you're going to get more free cash because you can put up to£4 ,000 a year in a lifetime ISA.

3:48You can't put anywhere near that much in a help to buy ISA. I think it's£2 ,400 a year if you exclude the first year. And then once the money's in, the lifetime ISA can be used on any UK residential mortgage with a property worth up to£450 ,000. whereas the Help to Buy ISA is a property worth up to£250 ,000 except in London where it's£450 ,000. So based on that you would absolutely think that the Lifetime ISA is a winner over the Help to Buy ISA and also because the Lifetime ISA money is paid at exchange whereas the Help to Buy bonus is only paid at completion so with the Lifetime ISA you could also use the money in there to help you with your deposit that you're giving whomever you're buying the house off whereas the help to buy ISA you can only use it towards your mortgage deposit.

4:40But the help to buy ISA does have one big benefit over the lifetime ISA. And that is that if you withdraw your money not for buying a qualifying property, there is no penalty. You will get back all the money that you have put in and the interest. You won't get the 25 % bonus because you're not buying a qualifying property, but you won't lose any money either. With the lifetime ISA, you get a 25 % bonus once you put the money in to be used on a first-time property or after you're age 60. But if you take the money out before age 60 and you're not using it to buy a qualifying property, even if you're using it to buy a property that's only just above that 450 ,000 threshold, so 460 ,000 say, then you pay a 25 % penalty.

5:28Now this is where the maths gets a little complicated. What does that mean? So you get 25 % and 25 % is taken off. But as your 25 % being taken off is off a bigger number than the 25 % was being added on top of, I know, I'm sorry, then effectively you lose 6.25 % of your money. So if you've got 10 grand in your lifetime, ISA, when you take it out, you will only have£9 ,375. You're effectively paying a fine to the state of 625 quid on£10 ,000. If you've got£10 ,000 in a Help to Buy ISA and you take it out not for buying a qualifying property, you get your£10 ,000 out. But remember, you have to have had a lifetime ISA open for a year before you can get that first-time buy bonus.

6:14So if you don't have a lifetime ISA open and you're planning to buy within the next year, that's a problem. Definitely stick within Help to Buy. If you have a lifetime ISA open, even with only a quid in it, then any money you added to it now you would be able to get the bonus on it because it's been open for a year so so that's the first rule the second rule is should you move it into a lifetime isa if you're going to be buying definitely going to be buying a qualifying property under 450 000 pounds then it gets tricky so now we will assume you have money and a help to buy isa and you have an open lifetime ISA or you won't be buying the property within the next year.

6:57My next question for you is, are you definitely going to be buying a qualifying property under 450 ,000? If the answer is no, you're probably safer to keep your money in the help to buy account because there's no risk of a penalty. If the answer is yes, my following question, it's like I'm doing a live radio decision tree here. My following question is, are you buying a property under£250 ,000? Because then you would still get the bonus in the help to buy ISA if you used it. I'm going to assume you're not because of the fact that you're asking the question, so that you're going to be buying a property between£250 ,000 and £450 ,000 outside London so you would only get the bonus on the lifetime ISA.

7:49Well, then it's a no-brainer. In that case, move your money out of the Help to Buy ISA and as long as your lifetime ISA has been open for a year, put it into the lifetime ISA because you will get the bonus. As simple as that in the lifetime ISA. And even though you can only move up to£4 ,000 a year and you could have more in the Help to Buy ISA, you're not going to get the bonus in the Help to Buy ISA so you may as well put it in the lifetime ISA and get the bonus on whatever you can put in. Now, if you're buying after April, you could put four grand in now and you could put four grand in after April, April the 6th to maximise your bonus.

8:19If I've misassumed and you're buying a property under£250 ,000 and you've got the money and the help to buy ISA versus the lifetime ISA, then it gets more complicated because you will get the bonus on the money and the help to buy ISA. So then what you have to look at is what is my time before I will be buying? Would you be able to get more money into the lifetime ISA by the time that you buy than you would be able to keep into the help to buy ISA? Because the bonus that you get is simply on the amount of money that you can put in. So does the£4 ,000 a year you can put in a lifetime ISA outweigh the£2 ,400 you can put in a help to buy ISA?

9:00But remember, if you've got£10 ,000 in a help to buy ISA, it's going to take you time to move that across to the lifetime ISA and you won't be able to make extra contributions during that time. And a final note on this, the amount that you can put into a help to buy ISA is capped at 12 grand. The lifetime ISA is uncapped because you can put£4 ,000 a year in, but it would take you three years to get to that 12 grand figure because maximum£4 ,000 contribution. And the help to buy ISA is planned to be closed down in 2029. But of course, the government is doing a review on this whole thing and we don't actually know.

9:32And I suspect they now would prefer to be more like the help to buy ISA model rather than the lifetime ISA model. so who knows what will happen on that. I think that is the full answer. And do you know, it was even trickier than I thought when I started talking, but I think that we've got there. The answer is it depends, but hopefully I've given you enough to understand. If not, just go listen back again more slowly, and hopefully that'll get you there. Play me out at 0.7 on your speed adjuster. Right, Matt, that was a complicated one. Please tell me. It's going to be a caller, I know. curator of questions.

10:09He is nothing but rigorous to his format. It's going to be a caller, but tell me it's a simple one. I wish I could say it is. Oh, no. I've got a caller for you. We've got Ruth. She is in London and she's here. Hi, Ruth. Hi, Martin and Matt. Hello, Ruth. What can I do for you? So, Martin, you briefly talked about capital gains allowance a couple of weeks ago, and it prompted me to look at how I could be able to diversify my savings so that I can use this allowance each year as well as the personal savings allowance. So my question is in two parts. Currently I have some money invested in an equity fund and I want to know how the income on this fund would be allocated in terms of fixed income and capital gains income?

11:04And when would this, each portion of this be accessible to me in the context of being taxable? I think you're probably doing a good thing because investment is a good thing if you're putting money away that you don't need for a long time. But I'd always be slightly careful of letting the tax tail wag the dog. You know, choosing what you choose to do based on having a tax allowance on it, I think is something you need to be, it can be useful, but you should be careful. But still, I think the move towards investment for many people, we underinvest in this country is probably a good thing for you.

11:32And you've gone through that. Capital gains is never about income. Capital gains is about profit. Income could be interest or dividends. So I think it's really important. Now, just to check, this is outside of an ISA, isn't it? yeah so i've used my isla allowance for this year and so i've got some money left over so this is this is a normal investment well let's just go capital gains is a tax on profits so for it to be a capital gain you need to be buying something at a thousand pounds and selling it at two thousand pounds then you've made a thousand pounds profit that is what capital gains is.

12:09So have you sold any of that equity fund? No. So then there's no capital gains at the moment. Have you earned interest and or dividends within that account? I would assume so. OK. So just to be really clear, the interest is interest, like savings interest, and it counts towards your savings interest category, any interest you've earned, even if it's in a stocks and shares account, which I think confuses people. Were you confused on that or not? That makes sense. Yeah. And dividends is dividend tax. And you get a£500 annual dividend tax allowance. So when you have money in stocks and shares, there are effectively three different taxes that are involved.

13:00So on the profit when you sell it is capital gains. Any interest you might have from cash, say, sitting in your stocks and shares account that's unused is interest like savings interest. Any dividends you've been paid are taxed as dividends and there is a dividend allowance and dividend tax rates. So there's sort of three different tax regimes, if that makes sense. That makes sense. Cool. So let's move on to the next bit. So this is more of a clarification than a question now. if I wanted to capitalise and maximise on the capital gains allowance each year, is it therefore best to sell my position within each tax year and reinvest rather than holding my position for, say, five years and accumulating that capital gains and being more at risk of being over the capital gains allowments when I eventually do sell my position.

14:03Gotcha. So what this is, is when we talked about it on the show the other day, this comes from me saying the problem with capital gains is you don't get an annual allowance for how long you've held it. So if you buy something at£1 ,000 today and sell it tomorrow, you've made£1 ,000 capital gain and it's subject to capital gains tax. If you bought it for£1 ,000 10 years ago and sell it tomorrow for£2 ,000, you've made exactly the same game and would be taxed in exactly the same way. They don't take into account the fact that you've held it for 10 years. That's the premise of your question, yeah?

14:35Correct. Okay. So, now I have to say this is not my specialist subject, so I'm giving you a general idea and you would need to speak to a specialist on it. It is worthwhile using your capital gains tax allowance if you want to, but there are risks to it. Now, the main way people do it is what's called bed and breakfasting. The tax year dates are not what's relevant here, particularly. That just is crystallising when you sold it and whether you're using that year's allowance or not. If you wanted to sell an asset, so let's say you're selling shares in Matt PLC, which I'm sure will be a very lucrative investment, Matt.

15:13So you're selling shares in Matt PLC because you want to hold them and you want to buy Matt PLC back. You would have to sell shares today and then wait at least 30 days before you bought it back for you to get that crystallisation of the capital gains. It's the 30-day rule. So you can't sell and buy back the next day, which of course means there's a risk in that time. You sell shares in Mac PLC. The price of Mac PLC rises in the meantime. So when you use your money to buy back those shares, you've got less shares than you would have done had you not sold it. and that's the risk that you're looking at.

15:50Now there is, if it's a fund you're talking about, so let's say you've got, for ease, not recommendation, you've got an S &P 500 tracker fund. You could sell your S &P 500 tracker fund today and then buy a different S &P tracker fund straight away because that's not the same asset and that, I believe, and I was checking on a website for this as I was doing it, from Aberdeen, advisors say this, that that would not breach your bed and breakfasting rules. But I need a little bit of brackets because I was just checking that online to see how that works. So do you see what I mean? There's the 30-day rule that you have to take notice of.

16:29Okay, understood. I didn't realise that. That's very good to know. Thank you. And so therefore, that is the issue. The issue is, yes, you're crystallising it for sales purposes. So, you know, once you're getting up there, then you're crystallising the gain so that you could, you know, So what you're saying is if I made£3 ,000 gain, I may as well say it then, use all my£3 ,000 capital gains tax allowance, my tax-free allowance for selling capital gains tax at that point, and then buy it back. And then hopefully it'll continue to grow and sell it in future again and crystallise another gain. Well, you can only do that with the 30-day gap in.

17:04You could, of course, if you had losses elsewhere, offset the losses against the gains. And that's, you know, there's a whole complexity in that too. so you're sort of thinking the right way but unfortunately people have thought it before you and there's some rules to make sure it isn't quite that simple Understood, thank you Phew, Matt PRC, I like that it's got a nice ring to it Yeah, I won't be investing

17:29Now Matt, I am demanding at this point a simple question for you I have worked my little cotton socks on I'm not sure they're actually cotton but let's just go with it and I would like something that's slightly less brain-taxing now. This one sounds simpler. It's definitely shorter, so I don't have to read as much. It's from Dawn. She says, good afternoon. My broadband provider have this morning cut off my broadband without any notice, meaning I'm now unable to work, she says I work from home, nor am I able to watch TV or use any Wi-Fi. I'm told by my provider it will take them three working days to send out a new router and reconnect.

18:07Please, can you help me? Because without being able to work at home, I'm probably going to be out of the job, not to mention a loss of earnings. Dawn, I can absolutely understand the frustration of that. I mean, broadband these days, especially for someone who works at home, it is absolutely necessary utility. The rules aren't particularly great, I'll be honest. If we go for the standard Ofcom compensation rules, you should get basically a tenner if it isn't fixed within two full working days after you report it. and then£10 for each full day. It's still not fixed after that, usually paid as credit onto your account.

18:42And I'm sure you're sitting there going, but I can't work. I can't do anything. Those are the rules. Now, I am not a lawyer. I don't know whether there would be a consequential loss case that you could take and you could consult a lawyer, but let's be honest, you're probably not going to. It's way too much hassle and you're far more worried about your work. My hope, have you got mobile with a decent data on it that you can use as a tether? Is there somewhere else that you can go and you can work? It's an absolute nightmare, but there's no real practical what can you make them do at super speed fix.

19:18I mean, they're going to take three days. You're probably going to end up getting 20 quid for it. It's nowhere near enough in your head, but those are the standard rules. If anyone's been in that situation and ever done more and pushed more, do get in touch. I'd love to hear what happened to you in those cases. But there are rules. They're just not that good in your case. I'm so sorry. Are you sitting there thinking, oh, I know what I wanted to ask him? Well, this is your opportunity. If you've got a question, then just send them in to martinlewispodcast at bbc.co.uk. And please do start them, dear Martin.

19:52No, dear Matt. Dear Martin. Dear Matt. Right, Matt, so at this point in the podcast is where we do that. You can ask me anything and everything and you tend to put a question to me, which is not on money, which I have to answer. What have you got? What weird and wacky out of the park question do you have this week? It's nice, isn't it? Because it lets the listener learn more about you. It's like humanising you. I'm not human. I've got one from Ollie he says hi team who would Martin pick to play with him in his dream four ball and at what course now what's four ball a four ball so that this is Ollie who realises that I love my golf even though I'm not very good I'm about a 17 18 handicap and a four ball is where four of you are playing together it could be a team's contest you could all be paying independently so what course is obvious I would like to play at Augusta where the US Masters is you know you watch it on the telly it's an incredible course it would be way too difficult for me but I would love I would dream one day of going and having a round at Augusta who would I have with me?

21:02okay so you probably have to go with Rory McIlroy obviously you probably want Rory McIlroy I'm also because I think I'll go for one of the I might go and I've got a reason for this I might go for Nick Faldo as well, who still does commentary now and is obviously, you know, a great golfer still. My third person, I'm going to go for my friend Joel, who I'm incredibly competitive with at golf. And we play year long tournaments where every game we play each other is counted. And he in the first year actually got a little trophy that I got for the first year. But he beat me last year and I have to give him the trophy back, which I'm not looking forward to.

21:43And I would choose Joel, one, because it would be nice to have a friend with, because I'm not so good at meeting strangers and I don't know Rory or Nick Faldo, so it'd be quite good to have someone who could support you through that. But also, most importantly, I think we're playing pairs. And I would tell Joel that he is playing with one of the greats of the game and he would play with Nick Faldo, who is a great golfer, but probably in his mid-60s now. And I would play with Rory McIlroy, who's a current champion and who's clearly going to beat Nick Fardo if everything goes right. And as we're playing in teams, I would win.

22:15And it would count as an extra point to my score chart against Joel. And that would make it even happier for me. Is there anyone you're not competitive with? You had your steps. Your steps competition, you're competitive with Joel. I'm competitive with people who like competition. I scrabble as well with Mrs. MSE. Have we got a competition? Well, who people address, I suppose. Oh, I suppose.

22:37Okay, Matt. Caller time? Caller time. Robert in Rotherham. Hi, Robert. Hi, Martin. You okay? I am. Hello, mate. What can I do for you? Right. All it is is a bit of advice. I upgraded with Sky Mobile last year. I've got three contracts, me, my son and my mum. Because I was Sky VIP, they offered me£5 a month, which isn't a lot of money. um they then have raised the money to eight pounds a month this month yeah um when I phoned up just to question it they never sent me an email so I phoned up to question it yeah they said it was the price hike yeah um and I said why has it gone up 60 percent and they said it's because we haven't put it up in the last two years yeah so I questioned that and left it at that and And then they said to me, in November, it's going up to£15 a month.

23:32Yeah. But I would still be in contract while November 2027. OK. So, they haven't notified you formally of this price hike? No, no email. And clearly, because it's Sky, you weren't told in advance that this would be happening? Nope. Well, I mean, it's interesting they haven't notified you. They should notify you. They have a requirement to notify you. So, something has gone wrong there. But even so, within 30 days of being notified of a price hike, and it's crucial, it's the notification period, not when the price goes up period, under Ofcom rules, because you were not told of this price hike when you signed up, you can leave this contract penalty free.

24:14Yeah, I've already, I asked for the PAC code, I've already left now. Yeah. But I just don't want it happening to anyone else. No, but what I think you need, you need to be careful of, you should, you know, you've got your PAC code. there may be because they haven't given you notifications you just got to be slightly careful they haven't given you notification that they're not going to charge you a penalty leaving fee because it has to be triggered by the notification so i'd like you to call them if you would yeah and just double check you say you've you've increased my price you didn't give me notification but you've told me on the phone that you are so i am exercising my right to leave within 30 days penalty free and I want to check there's no penalty for doing so.

24:53I'd call them up and make that check. But yeah, I mean, it's something I've been widely warning on. Sky, in a way, is slightly more transparent than what happened with O2 when it said it was going to hike people's prices by a certain amount, but hike them by even more. Sky simply says, we will not tell you in advance of what the price hikes will be, but we will always let you leave within 30 days of notification. And so you can get out, you can go somewhere else, and it cannot charge you a penalty for doing so but because you've got that 30 days of notification and you're saying to me i haven't had notification that's the only little bit of worry for me on your situation right okay so just give them a ring give them a ring and check and and make sure that you are full fulling in within the ofcom rules you know i'm just thinking if you left and this would be absurd but sometimes absurd things happen you left yesterday and you get your your letter is sent today that arrives tomorrow then there's an argument that you did not get it within 30 days of notification.

25:52Do you see what I mean? Yeah. I just want to be slightly careful on that. Yeah, I can do that. All right. Good luck, bud. Okay. Thank you, bye. It's producer Matt here recording this after we finished recording the podcast because I contacted Sky and a spokesperson told me, we don't take decisions like this lightly, which is why we've not increased mobile prices mid-contract for more than seven years. This change reflects the ongoing cost pressures being faced across the industry. And that's it for this week's Question Time. Do not forget to subscribe so you know when we release a new episode.

26:26We put one out each Monday alongside the regular podcast with Adrian on Thursdays. Aren't you lucky? Two doses of money-saving tips and tricks a week. Do ensure you send your questions in, if you've got some to ask, to martinlewispodcast at bbc.co.uk and address them, dear Martin. Dear Matt. Dear Martin. I got to pay, so I'm going to work hard, I'm going to live it. I got to mouth, I got to feed, so I'm going to make sure everybody eats. Martin Lewis is the founder of moneysavingexpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk.

27:14The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double-checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.