Lifetime ISAs guide

Knotty_Buoy

Hello all!

I'm having a little trouble finding an answer to this but apologies if this has already been mentioned here.

I opened a LISA last year with the intention of buying a home at the end of 2019 (which I still intend on doing). However, since opening & funding the account, my work situation has changed and now find myself out of the UK 160+ days of the year.

I understand you are not allowed to rent out a property that was purchased with LISA, however, due to my personal circumstances changing, will it be possible for me to rent out rooms?

I have contacted both my provider (Skipton) & HMRC and neither have been able to give any answers.

Thanks in advance for any information!

Alexland

In order to make the penalty free LISA withdrawal for the first time qualifying residential purchase you must complete a buyer declaration to say "on completion the property will be my only or main residence, or will become so as soon as it is suitable for use"

As such you are OK to rent out rooms provided it is your main residence which could be the problem depending on your exact pattern of absence from the UK, where you keep your personal posessions, etc.

For example if you just have a lot of work travel and are staying overnight in various hotels around the world you could construct an argument that the property is still your main residence as it is where you always return, receive your post and keep your stuff. It would be difficult if you didn't have a dedicated bedroom, were not routinely staying overnight or ceased to be a UK resident for tax purposes.

Alex

Knotty_Buoy

Thank you very much Alex!

Alexland

Knotty_Buoy wrote: »

Thank you very much Alex!

Also you may wish to consider the Statuary Residence Test for if you will remain a UK resident and the rules of the Rent A Room scheme to avoid paying income tax on the rent.

https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt
https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

Also be consistent in all your paperwork to create an evidence trail. For example, don't be tempted to claim the single person 25% council tax discount as it is just your lodger living at the property, ensure the utility bills are in your name, draw up a lodger agreement, etc. It might make sense to see if you can slightly adjust the periods of absence to ensure you remain unquestionably compliant.

Alex

Knotty_Buoy

Wow, I didn't expect such a great response to this. Thanks again Alex!

sully1311

Just received my bonus from Skipton for March. Another cool £1000😎

SarahB89

I have a Skipton LISA, as does my partner. We're using them as part of a house deposit (hopefully). However, the next interest payments aren't due until July (quite feasibly can be used) and March (hopefully won't be used). I've tried to redirect the interest so that it comes out into another account, but the Skipton website isn't giving me that option. It's not a huge amount, but I'd like to not have to leave it there til retirement. Anyone know if you can ask for the interest to be paid elsewhere?

snowqueen555

Waiting for my Hargreaves Lansdown Bonus to come in, then I iwll transfer to Newcastle.

It annoys me there s not more competition in this category, if instant access can offer 1.5% I would've thought a Lisa would at least offer that.

Alexland

SarahB89 wrote: »

I've tried to redirect the interest so that it comes out into another account, but the Skipton website isn't giving me that option. It's not a huge amount, but I'd like to not have to leave it there til retirement. Anyone know if you can ask for the interest to be paid elsewhere?

LISA interest builds up inside the account and would be subject to the 25% penalty if it wasn't used towards a qualifying property purchase and was withdrawn before age 60.

If you do not wish to retain the LISA account beyond your property purchase then it would make sense for your solicitors to tell Skipton that you wish to make a complete withdrawal and close the account. Skipton should calculate the interest earned and add it into the closing balance for the penalty free property purchase withdrawal?

Alex

2BobB

Hi all, please indulge my confusion and anxious enquiry regarding my Skipton LISA

I opened it on the 22nd of May last year and after reading (what I considered to be) carefully all instructions and information I could glean I simply thought that as long as I deposited a grand total of £4,000 by the 22nd of this month I would qualify for the £1,000 bonus a year later.

I am now concerned I will miss out on this total bonus as I didn't deposit the entire £4,000 before the end of the financial year, which is when the ISA "yearly" allowance resets. As of this writing I now have deposited a total of £4,000 since opening it via a monthly payment, which varied slightly month to month as to amount.

It says on my account the next date of interest payment is the 21st of this month so should I be expecting the account balance to read 5k after that HMRC payment?

I find it quite misleading if this is not the case as all guides only ever allude to "a year" and don't necessarily emphasise "the financial year" or the specific dates making up the tax year.

I received an email from Skipton on the 10th April alerting me to the progress of the account and that it would soon be a year since I opened it, but other than that no other warnings about making deposits by certain tax year cut offs etc

I really hope I am fretting over nothing here!