Lifetime ISAs guide

eskbanker

It's option 3 - the penalty for early withdrawal is 25% of the amount withdrawn, which by then will include the bonus.

pink_pirlie

I sent an email to the savings audit team - you won’t get a reply!

You will get he bonus even if you withdraw the money before the bonus is paid.

You will face a penalty of 25% on the total amount you withdraw if it is before the 1 year anniversary.

Do you need all the money for the exchange deposit or can you just withdraw part of it?

If you can hold off as long as possible you could draw it down after the 1 year anniversary. You can take it out in multiple withdrawals.
Or could you borrow money short term?

MG42Maniac

Thanks for answers. Nutmeg has confirmed the following:
If I withdraw the funds right now, I will see £3000. (£4000 - 25%)
If I wait until the bonus is paid, at the end of April, I will see £3750. (£5000-25%)

I will have to wait until the end of April, I will exceed the 28 days set by Bloor Homes but I am not wasting £1500.

pink_pirlie

Can you wait until after the anniversary to withdraw the bonus?
You!!!8217;ll still lose 25% when you withdraw that even if you take the £4000-25% before it is paid.

MG42Maniac

No, sadly not. I cannot string out Bloor Homes that long. I figured if I wait, it will be the 25% off of the amount with bonus rather than off the amount that is just my hard earned savings. It's not ideal, either way but I feel waiting for the bonus will soften the financial blow.

pink_pirlie

Financially it makes no difference when you withdraw it before or after the bonus is paid.

Withdraw £4000 now - get £3000
Withdraw the bonus once paid - get £750
Total - £3750


Withdraw £5000 in full when the bonus is paid - get £3750.

Either way you lose £250 of your money.

The only way to avoid that is to wait to withdraw the £1000 bonus after the 1 year anniversary and then you will come out even.
Withdraw £4000 now - get £3000
Withdraw £1000 bonus after anniversary - get £1000
Total - £4000

If you can get by with leaving as much of the balance as you an until after the anniversary (even if you need to take out some now and pay 25%) then you will minimise the loss.

simon430

Anyone else received a letter from Skipton saying their details are incorrect and are unable to claim your bonus?

Been onto the Skipton Live chat and they said it was sent out by accident, person on the chat said the bonus still should go through, but I'm not convinced.

Anyone else had this problem?

Kreacher

simon430 wrote: »

Anyone else received a letter from Skipton saying their details are incorrect and are unable to claim your bonus?

Been onto the Skipton Live chat and they said it was sent out by accident, person on the chat said the bonus still should go through, but I'm not convinced.

Anyone else had this problem?

I had the same thing - saying my details did not match HMRC. I spoke to them on live chat and they told me my details were correct and not to worry.

simon430

Hi Kreacher,

That's what they told me on live chat as well, fingers crossed it gets paid in early May!

MG42Maniac

For anyone interested, I got a reply back from HMRC after just one day!

Thanks for your email.

You are correct when you say that your Lifetime ISA must be open for 12 months in order to qualify for a charge free withdrawal for the purposes of a first time residential purchase.

You advise that you and your partner invested in your Lifetime ISAs on 29 June 2017.


In April 2018 your ISA manager will return this information to HMRC and the government bonus will be paid to them, on the basis of your 2017/18 subscriptions, by the end of the first week of May 2018.

I am unsure of how long it will take for this to reach your individual accounts thereafter.

If you then withdraw funds from your Lifetime ISA before the full 12 months from the date of your first subscription you will be charged a 25% withdrawal.

For example

Total 2017/18 subscriptions £4,000

Government bonus paid May 2018 £1,000


Withdrawal after less than 12 months £5,000

Withdrawal charge 25% £1,250

Investor receives £3,750

This means that you will not suffer the loss of the government bonus but you will be subject to 25% withdrawal charge on any amount you withdraw before the full 12 months have elapsed.