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  • FIRST POST
    • MSE Ben
    • By MSE Ben 8th Jun 17, 11:45 AM
    • 22Posts
    • 2Thanks
    MSE Ben
    MSE News: 'First cash Lifetime ISA now available but likely to be only one for now
    • #1
    • 8th Jun 17, 11:45 AM
    MSE News: 'First cash Lifetime ISA now available but likely to be only one for now 8th Jun 17 at 11:45 AM
    No other providers plan to follow the lead of Skipton Building Society and launch a cash Lifetime ISA ...
    Read the full story:
    'First cash Lifetime ISA now available but its likely to be the only one for a while'

    Click reply below to discuss. If you havent already, join the forum to reply. If you arent sure how it all works, read our New to Forum? Intro Guide.
Page 1
    • veryintrigued
    • By veryintrigued 8th Jun 17, 12:17 PM
    • 1,936 Posts
    • 1,188 Thanks
    veryintrigued
    • #2
    • 8th Jun 17, 12:17 PM
    • #2
    • 8th Jun 17, 12:17 PM
    Ben.

    Why do keep starting threads on LISAs in this section rather than the 'ISAs and Tax Free Savings' section?
    • binaryuniverse
    • By binaryuniverse 8th Jun 17, 12:36 PM
    • 303 Posts
    • 130 Thanks
    binaryuniverse
    • #3
    • 8th Jun 17, 12:36 PM
    • #3
    • 8th Jun 17, 12:36 PM
    I've opened one, to get the clock running. Should some other providers come along then I can do a transfer.

    Main concern, for me, is what happens if I need access to that cash (some form of emergency) that involves me losing money to get at it. The bonus I don't mind losing. So be it. But to charge me 25% on top as well?

    Still, I have some 10 months before I need to decide on that.
    • Kim_13
    • By Kim_13 8th Jun 17, 1:01 PM
    • 1,143 Posts
    • 1,540 Thanks
    Kim_13
    • #4
    • 8th Jun 17, 1:01 PM
    • #4
    • 8th Jun 17, 1:01 PM
    I've opened one, to get the clock running. Should some other providers come along then I can do a transfer.

    Main concern, for me, is what happens if I need access to that cash (some form of emergency) that involves me losing money to get at it. The bonus I don't mind losing. So be it. But to charge me 25% on top as well?

    Still, I have some 10 months before I need to decide on that.
    Originally posted by binaryuniverse
    It's 5% on top I believe. If the money was in a pension it would also be locked away so it's not so different, but should someone fall on hard times and need to make a claim for means tested benefits, the LISA money could exclude them and force them to pay the charge. A pension pot is disregarded in such a claim, as far as I'm aware.
    Sealed Pot 10 #520 ~ ~62.55/100
    VSP 2017 #9 ~ 41.40/250.00
    CCCC 2017 #1 ~ 162.71/120.00
    EF #170 ~ 500
    Xmas 2017 #25 ~ 10/365
    365 Day Penny Challenge #4 ~ 17.31/667.95
    • eskbanker
    • By eskbanker 8th Jun 17, 1:08 PM
    • 4,798 Posts
    • 4,527 Thanks
    eskbanker
    • #5
    • 8th Jun 17, 1:08 PM
    • #5
    • 8th Jun 17, 1:08 PM
    Main concern, for me, is what happens if I need access to that cash (some form of emergency) that involves me losing money to get at it. The bonus I don't mind losing. So be it. But to charge me 25% on top as well?
    Originally posted by binaryuniverse
    You wouldn't lose the bonus and another 25% on top as well!

    If you withdrew this tax year (before any bonus payment) then you'd get back all you'd paid in.

    If you withdrew later, you'd be charged 25% of the bonus-inclusive figure, which effectively means losing the bonus and another 6.25%.
    • binaryuniverse
    • By binaryuniverse 8th Jun 17, 2:36 PM
    • 303 Posts
    • 130 Thanks
    binaryuniverse
    • #6
    • 8th Jun 17, 2:36 PM
    • #6
    • 8th Jun 17, 2:36 PM
    That's not according to Skipton's page. If I were deposit 4000, and then withdraw, in year two, I'd lose the bonus plus a further 250.

    • eskbanker
    • By eskbanker 8th Jun 17, 2:44 PM
    • 4,798 Posts
    • 4,527 Thanks
    eskbanker
    • #7
    • 8th Jun 17, 2:44 PM
    • #7
    • 8th Jun 17, 2:44 PM
    Yes, those Skipton figures tally exactly with mine! If you withdraw 5K after receiving the bonus, the penalty is 25% of the bonus-inclusive figure of 5K, i.e. 1,250, which can be broken down as losing the 1K bonus and also another 6.25% (of the 5K), i.e. 250.

    Edit: think we're at cross purposes! When you said 25% on top you must have meant 25% of the bonus not an extra 25% deduction from the amount being withdrawn.... So, yes, the penalty charge is 125% of the bonus, to incentivise savers only to use it for the intended purpose(s).
    Last edited by eskbanker; 08-06-2017 at 2:55 PM.
    • binaryuniverse
    • By binaryuniverse 8th Jun 17, 2:52 PM
    • 303 Posts
    • 130 Thanks
    binaryuniverse
    • #8
    • 8th Jun 17, 2:52 PM
    • #8
    • 8th Jun 17, 2:52 PM
    But it is an extra 25% of the bonus amount.
    Either way, regardless of how either of us want to look at a percentage figure, in real terms it's 250 lost from my initial pay in (not counting any interest).

    And that is hardly a good deal.
    • Dom_Fletch89
    • By Dom_Fletch89 8th Jun 17, 4:52 PM
    • 14 Posts
    • 0 Thanks
    Dom_Fletch89
    • #9
    • 8th Jun 17, 4:52 PM
    • #9
    • 8th Jun 17, 4:52 PM
    Just thought I'd leave some of the important points here from the Skipton Lifetime ISA documents that I got sent through yesterday once I'd set my account up. Set up was easy and took about 10 minutes to set up accounts for myself and partner. This is mainly for the purposes of people considering opening an account with the sole intention of using it towards buying their first house

    C Qualifying criteria for house purchase
    Owning your own home is an exciting prospect.You can use your Lifetime ISA to help buy your home as long as the following criteria are met:
    You have held your Lifetime ISA for at least 12 months
    If you are buying with someone else, you can both use a Lifetime ISA as long as neither of you has owned a property previously
    The value must not exceed 450,000
    The property must be purchased in the UK with a mortgage, but not a buy to let mortgage unless you, or your spouse or civil partner,
    are a UK Crown employee serving overseas and intend to use the property as your main residence in future
    You must occupy the property as your main residence immediately on completion, or if you or your spouse/civil partner are a UK Crown employee serving overseas, you must intend to in future

    D Can I make more than one withdrawal when I come to buy my first home?
    You can make more than one charge-free withdrawal and theres no minimum withdrawal amount. For example, you may have more than one Lifetime ISA and you may need to phase your withdrawals during your house purchase.

    E How do I make a withdrawal to buy a house?
    When you come to buy, youll need to tell your conveyancer you want to use part or all of your Lifetime ISA towards the purchase and provide them with a declaration. Your conveyancer also has to provide us with a declaration. Its your responsibility to ensure this is provided, but your conveyancer should do this as part of the buying process. Once we receive the appropriate paperwork from your conveyancer well pay the amount requested to the conveyancer within 30 days without applying the government withdrawal charge.

    G - When is the 25% bonus paid into my account?
    We will claim the 25% bonus from HMRC on your behalf. For the 2017/18 tax year, HMRC will pay the bonus within 28 days of 6 April
    2018. From the 2018/19 tax year, onwards, HMRC will pay the bonus based on the contributions you have made each month. This will
    be paid by HMRC within 4-9 weeks. The bonus is paid on all contributions made before you reach the age of 50.
    • Gavin83
    • By Gavin83 8th Jun 17, 5:04 PM
    • 4,298 Posts
    • 6,713 Thanks
    Gavin83
    But it is an extra 25% of the bonus amount.
    Either way, regardless of how either of us want to look at a percentage figure, in real terms it's 250 lost from my initial pay in (not counting any interest).

    And that is hardly a good deal.
    Originally posted by binaryuniverse
    Depends how you look at it. It's certainly not a savings account, it's there for two possible purposes. If you think you might end up using it for something else it's probably not worth it.

    However if you intend to use it to buy a house then it's silly not to take it up. In my case I know I'll be using it to buy a house so it's a free 1k (2k counting my fianc!) each year.
    • binaryuniverse
    • By binaryuniverse 8th Jun 17, 8:01 PM
    • 303 Posts
    • 130 Thanks
    binaryuniverse
    However if you intend to use it to buy a house then it's silly not to take it up. In my case I know I'll be using it to buy a house so it's a free 1k (2k counting my fianc!) each year.
    Originally posted by Gavin83
    Well exactly. This is my only reason for using one, also. I've only just started saving for a deposit, on a house. So I'm unlikely to be able to get one in the next 5-10 years, quite possibly longer. So the more I can put in to one of these things, and the earlier, the better.

    But, hypothetically speaking, let's say you, for whatever reason, are unable to buy a house, or you need to get that cash urgently, as life has thrown a curveball at you (as it so often likes to). Then you lose out.
    • Malthusian
    • By Malthusian 9th Jun 17, 10:32 AM
    • 2,214 Posts
    • 3,074 Thanks
    Malthusian
    Well exactly. This is my only reason for using one, also. I've only just started saving for a deposit, on a house. So I'm unlikely to be able to get one in the next 5-10 years, quite possibly longer. So the more I can put in to one of these things, and the earlier, the better.
    Originally posted by binaryuniverse
    If you're aiming to buy a house in 5-10 years then you definitely shouldn't be using a lifetime cash ISA. The fact that your savings are being eroded while the house you will eventually buy is increasing in value means it will definitely be longer than you anticipate, not "quite possibly". Running to stand still means that 5-10 years could easily turn into 7-15.
    • binaryuniverse
    • By binaryuniverse 9th Jun 17, 11:23 AM
    • 303 Posts
    • 130 Thanks
    binaryuniverse
    I can't agree with that at all. Whilst I am saving up for a deposit the money has to sit somewhere. Sure, I could put it in account offering better interest rates, but then I wouldn't get the bonus, on buying a property.
    • eskbanker
    • By eskbanker 9th Jun 17, 11:47 AM
    • 4,798 Posts
    • 4,527 Thanks
    eskbanker
    It's certainly not a savings account
    Originally posted by Gavin83
    What do you believe the 'SA' stands for in ISA?

    However, I agree that it's a specialist account designed for two specific purposes and hence the penalty for any other use, in much the same way as early withdrawal penalties are applied to fixed-term accounts....
    • Malthusian
    • By Malthusian 9th Jun 17, 11:58 AM
    • 2,214 Posts
    • 3,074 Thanks
    Malthusian
    I can't agree with that at all. Whilst I am saving up for a deposit the money has to sit somewhere. Sure, I could put it in account offering better interest rates, but then I wouldn't get the bonus, on buying a property.
    Originally posted by binaryuniverse
    You're ignoring lifetime stocks and shares ISAs.
    • binaryuniverse
    • By binaryuniverse 9th Jun 17, 12:36 PM
    • 303 Posts
    • 130 Thanks
    binaryuniverse
    You're ignoring lifetime stocks and shares ISAs.
    Originally posted by Malthusian
    I am certainly ignoring them for now. There's every chance the value of my deposited money could go down. And, although I believe I won't looking for a house until at least 5 years, things could change and I am in a position to get one sooner.

    I'm happy with a Cash ISA.
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