Help to Buy ISA Legacy: What to Do With Yours in 2026

The Help to Buy ISA (H2B ISA) closed to new applicants on November 30, 2019, but millions of accounts remain active. According to HMRC data, approximately 1.8 million H2B ISAs were still open as of March 2025, holding an estimated £4.2 billion in savings. 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 have changed since the scheme's closure. 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 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 (with some exceptions for inherited properties). The bonus is 25% of your balance at the time of claim, up to a maximum of £3,000. If you have £10,000 saved, you'll receive £2,500. 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. Withdrawing from your H2B ISA and depositing into a LISA counts as a new subscription, subject to the £4,000 annual LISA limit. Transferring preserves the tax-free wrapper and doesn't count against your annual allowance. You can transfer up to £4,000 from your H2B ISA to a LISA in a single tax year. If your H2B ISA balance exceeds £4,000, you can transfer the remainder in subsequent tax years. 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.

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. The withdrawn amount doesn't count towards your annual ISA allowance for the year you withdraw. Once withdrawn, you can use the money for any purpose — paying off debt, investing, emergency fund, or other savings goals. If you're considering withdrawing because you've bought a property but didn't claim the bonus, check if you might be eligible for an exception (e.g., inherited property, property abroad). HMRC's rules have specific exceptions, but they're narrow. If in doubt, consult a financial adviser or contact HMRC directly before withdrawing.

With the ISA deadline approaching on April 5, 2026, H2B ISA holders have a time-sensitive decision. If you plan to transfer to a LISA, doing so before April 5 allows you to use both the current tax year's LISA allowance (£4,000) and potentially next year's allowance immediately after April 6. This accelerates your bonus eligibility timeline. For example: transfer £4,000 before April 5, 2026 → receive £1,000 bonus (paid in May/June 2026). Transfer another £4,000 after April 6, 2026 → receive another £1,000 bonus (paid in May/June 2027). That's £2,000 in bonuses within 14 months, versus £1,000 if you delay the transfer. 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, but you can also make a lump sum contribution of up to £1,200 in the first month of opening (though for existing accounts, this option has passed). 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. H2B ISAs remain open indefinitely unless you close them. They continue earning interest (typically 2.0-3.5% AER) but won't automatically convert to another product. 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. With 1.8 million accounts still open, 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.