Lifetime ISAs guide

Ed-1

josephibbs93 wrote: »

Great! Thanks for this.

Also, you have to have the account open for one year before you can use the bonus for buying a first time home. How will this actually work? Once I've had it open for a year and the bonus has been paid on the full balance, I just tell my solicitor that I would like to use this as part of the mortgage deposit?

25% bonuses get added to the LISA based on contributions made in the previous qualifying period (month to month from April 2018 onwards). You're eligible to make a penalty-free withdrawal 12 months after the first deposit. The funds have to be claimed by the conveyancer from the provider and paid directly to them to go towards the purchase price of the property.

josephibbs93

Ed-1 wrote: »

25% bonuses get added to the LISA based on contributions made in the previous qualifying period (month to month from April 2018 onwards). You're eligible to make a penalty-free withdrawal 12 months after the first deposit. The funds have to be claimed by the conveyancer from the provider and paid directly to them to go towards the purchase price of the property.

Great! So if I have additional savings (in other accounts), it would be in my best interest to use 100% of the LISA balance (including bonus) and have some spare to top up my deposit? The balance of the LISA would then be £0, and therefore close?

Ed-1

josephibbs93 wrote: »

Great! So if I have additional savings (in other accounts), it would be in my best interest to use 100% of the LISA balance (including bonus) and have some spare to top up my deposit? The balance of the LISA would then be £0, and therefore close?

You could either close the LISA or keep it open (or open another) to use for retirement saving.

josephibbs93

Thanks for your help!

femster82

eskbanker wrote: »

As you've seen, you can't get a HTB bonus for a property purchase above £250K outside London.

However, if you're planning on buying this year and don't yet have a LISA (as implied by your post), you'd lose out on a bonus there too as a LISA has to be open for 12 months before penalty-free withdrawal (which would actually lose yo more than just the bonus).

Have you already opened the LISA?

No, I haven't opened one as of yet. I don't know if it is worth opening one now?

What would happen if I did as Martin suggested on the main site and opened one with £1 and if I don't use my HTB ISA before next year transfer the £4000 before this time next year. Would I still get the 25% on that £4000?

Alexland

femster82 wrote: »

No, I haven't opened one as of yet. I don't know if it is worth opening one now?

What would happen if I did as Martin suggested on the main site and opened one with £1 and if I don't use my HTB ISA before next year transfer the £4000 before this time next year. Would I still get the 25% on that £4000?

I don't see why you wouldn't open a LISA with £1 to get the 12 month clock started - the penalty for early closure would only be a few pennies.

Then if your determined that you were buying in more than 12 months time you could deposit a further £4000 next tax year for a £1k bonus. If it was even further delayed until summer 2019 you could add a further £4k at the start of the subsequent tax year for an extra £1k bonus.

ask1234

Hi All,
I am a self-employed tax payer and planning to invest in LISA this year. The intention is to invest towards LISA for retirement. I would like to know whether investing in LISA would anyway reduce the annual private pension contribution limit £40,000 a year? [i.e hypothetically speaking can someone invest 40k in private pension AND 4k in LISA [wish I had that much money ]

eskbanker

Annual pension and LISA contribution limits are unrelated so don't affect each other in any way.

If you haven't already, it'll be worth researching which is likely to be better for you - https://www.moneysavingexpert.com/savings/lifetime-ISAs#pension2 gives a high-level overview to start with....

ask1234

@eskbanker - Thank you for the quick reply and useful link.

System

Ed-1 wrote: »

It probably does in practice but interest wouldn't count as a current year ISA subscription anyway (even if it did count as a LISA subscription). Interest earned within an ISA wrapper can never count as an ISA subscription.

Is there any way to get 100% clarification on this ? As there has been varying opinions that contradict each other on this thread...

I'm only looking at about £25 interest over the course of the 17/18 tax year from my H2B but was told by a Skipton rep that this would count towards (ie. 'Eat-up') some of my 17/18 4K Max LISA limit. So I likely wouldn't risk breaching this limit for the sake of £25.

However, this would mean that my bonus would then no longer be 1K (if I deposit the max 4K minus my H2B interest earned this tax year...) ; so then I'm looking at missing out on more & more, fortunately it's only small amounts in my case.... So like I say, may err on the side of caution for the sake of the benefits.

Thanks in advance for any light shed !