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    • foostick
    • By foostick 6th Sep 17, 12:16 PM
    • 3Posts
    • 0Thanks
    foostick
    Help understanding a LISA
    • #1
    • 6th Sep 17, 12:16 PM
    Help understanding a LISA 6th Sep 17 at 12:16 PM
    Hi all, I've read around a few threads and articles and I'm trying to wrap my head around the LISA model as I'm looking to save for a house as a first time buyer. I've compared it to the Help to Buy ISA and I think the LISA works better for me due to being able to front load a relatively large amount of cash into one over short term period.

    Is the following a correct way of interpreting the rules around them?

    - I open a LISA this month and pay in £5 say to start the ball rolling.
    - I then continue to pay in £5 a month until September 2018, at this point the account has been open for one year and a 25% bonus is payable on the balance accrued to that date?
    - I then leave the LISA dormant from September to January 2019 or continue with the minimal amounts
    - In January 2019 I can increase my payments significantly and from January to April 2019 can deposit enough to make it up to the full £4k tax year allowance.
    - Then inl May 19 which is the new tax year (I think) I can then start loading back into it and could deposit £2500.00 by October.

    My understanding is:

    - I'd receive 25% bonus on the £60 accrued from September 17 - September 18.
    - Then 25% on each amount paid in each month thereafter which is capped at £4k per tax year, so £1k bonus on the £4k that would go in from September 18 to April 19
    - Then an additional 25% on the £2500.00 deposited from May to October 19

    Apologies if that seems overly simplistic or completely wrong,!
Page 1
    • eskbanker
    • By eskbanker 6th Sep 17, 12:39 PM
    • 5,466 Posts
    • 5,270 Thanks
    eskbanker
    • #2
    • 6th Sep 17, 12:39 PM
    • #2
    • 6th Sep 17, 12:39 PM
    I suspect from your post that the constraint on your contributions is how much money you have available rather than the LISA rules, i.e. you don't really seem to be looking at front-loading in the usual sense of getting as much in as quickly as possible if you're planning most contributions being in 2019, but to summarise:
    • The 25% bonus is paid in April 2018 on all contributions made up to 5 April 2018 (the last day of the 2017/18 tax year).
    • Thereafter, all contributions attract a 25% bonus paid the following month.
    • Contributions can be made in any pattern but subject to an overall annual (tax year) limit of £4K.
    • The LISA funds can't be used without penalty until a year after it was opened (the first anniversary is unrelated to bonus payment as above).
    So, your contribution schedule would work but the timing of the bonus payments is slightly different from what you'd believed.
    • Ed-1
    • By Ed-1 6th Sep 17, 12:51 PM
    • 1,979 Posts
    • 1,057 Thanks
    Ed-1
    • #3
    • 6th Sep 17, 12:51 PM
    • #3
    • 6th Sep 17, 12:51 PM
    Hi all, I've read around a few threads and articles and I'm trying to wrap my head around the LISA model as I'm looking to save for a house as a first time buyer. I've compared it to the Help to Buy ISA and I think the LISA works better for me due to being able to front load a relatively large amount of cash into one over short term period.

    Is the following a correct way of interpreting the rules around them?

    - I open a LISA this month and pay in £5 say to start the ball rolling.
    - I then continue to pay in £5 a month until September 2018, at this point the account has been open for one year and a 25% bonus is payable on the balance accrued to that date?
    - I then leave the LISA dormant from September to January 2019 or continue with the minimal amounts
    - In January 2019 I can increase my payments significantly and from January to April 2019 can deposit enough to make it up to the full £4k tax year allowance.
    - Then inl May 19 which is the new tax year (I think) I can then start loading back into it and could deposit £2500.00 by October.

    My understanding is:

    - I'd receive 25% bonus on the £60 accrued from September 17 - September 18.
    - Then 25% on each amount paid in each month thereafter which is capped at £4k per tax year, so £1k bonus on the £4k that would go in from September 18 to April 19
    - Then an additional 25% on the £2500.00 deposited from May to October 19

    Apologies if that seems overly simplistic or completely wrong,!
    Originally posted by foostick
    The £4,000 allowance applies to the tax year which runs from 6th April to 5th April the next year.

    The bonus for 2017/18 tax year is paid at the end of the tax year (not at the end of the account year). The bonus for 2018/19 tax year onwards is paid based on what you've put in the previous month.
    • foostick
    • By foostick 6th Sep 17, 12:54 PM
    • 3 Posts
    • 0 Thanks
    foostick
    • #4
    • 6th Sep 17, 12:54 PM
    • #4
    • 6th Sep 17, 12:54 PM
    Thanks for the response that's really helpful

    Yes paying off debt for the rest of this year and through next year and then once that's clear looking to then use that to save for a house, ideally I'd like a £10k deposit so being able to get an additional £1625 on top of the £6500 saved would help massively in getting to that figure but can't start saving really until 2019.
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