Lifetime ISAs guide

GD7

Hi all,

I have some questions that I cannot seem to find answers to on the MSE LISA page, government page, or by searching in google and this thread. I apologise if they have been asked before.

1. I know that one person can have two LISAs, and that when buying a house you and your partner can combine two LISAs to buy a house, but can one person use two or more LISAs in their own name to buy a house? E.g. if I have three LISAs and my partner has one, can we combine four LISAs to buy a house? Is there a limit? I dont intend on having loads but I'm curious to know as I would've thought there would be a limit.
   
   I ask this as I opened a SS Hargraves Lansdown LISA but they now no longer accept transfers from other LISA providers, however I also have a Moneybox Cash LISA, so I have two LISAs and my partner has one.
   
   
2. I know that you cannot open two LISAs or deposit into two LISAs in the same tax year, but can I open a new LISA if I have already deposited into a different one in that same tax year, so long as I dont deposit any new money into the new one?
   
   I want my Moneybox Cash LISA to be transferred to a SS LISA, ideally my HL SS LISA, however they now dont take external transfers.
   
   So instead I thought to transfer it to a Moneybox SS LISA, however Moneybox themselves told me they cannot transfer it because they would have to open a new MB SS LISA in my name, and then transfer out of the Cash LISA, so even if this only took a couple of days, for those couple of days I would have two LISAs with the same provider which is against government policy so cannot be done. The only way is to transfer the MB Cash LISA to an external provider, then transfer back to MB SS LISA, which obviously will take multiple years.
   
   I then thought I could open an AJ Bell SS LISA as they accept transfers. I have however already deposited into my HL SS LISA this year so do I have to wait until 2022 to open an AJ Bell SS LISA? Even if I dont deposit any new money into it, but just transfer the MB Cash LISA in full to the AJ Bell?
   
   My end game is to have one LISA that is a SS LISA.
   
   This would all be a lot easier if it were mandatory to accept external transfers and also possible to transfer Cash to SS or vice versa within the same provider. Just because of a few days overlap, it makes the whole process take years.

eskbanker

GD7 said:

1. I know that one person can have two LISAs, and that when buying a house you and your partner can combine two LISAs to buy a house, but can one person use two or more LISAs in their own name to buy a house? E.g. if I have three LISAs and my partner has one, can we combine four LISAs to buy a house? Is there a limit? I dont intend on having loads but I'm curious to know as I would've thought there would be a limit.
   

Not aware of a limit but each person can definitely use more than one, as per https://www.gov.uk/guidance/lifetime-isa-withdrawals-for-a-first-time-residential-purchase#inv-dec

Before making a withdrawal from a Lifetime ISA, the investor must give their purchasing conveyancer all the following information in a declaration:

• the full or partial withdrawal amount (or aggregated amount if more than one Lifetime ISA)
• [...]

GD7 said:

1. (2) I know that you cannot open two LISAs or deposit into two LISAs in the same tax year, but can I open a new LISA if I have already deposited into a different one in that same tax year, so long as I dont deposit any new money into the new one?
   

My understanding is that yes, as you can generally open as many ISAs as you like but only pay new money into one of each type per tax year, this applies to LISAs.

GD7 said:

Moneybox themselves told me they cannot transfer it because they would have to open a new MB SS LISA in my name, and then transfer out of the Cash LISA, so even if this only took a couple of days, for those couple of days I would have two LISAs with the same provider which is against government policy so cannot be done.

I'm not aware of anything in the scheme rules preventing multiple LISAs with the same provider, but Moneybox themselves could impose that restriction unilaterally.

GD7 said:

My end game is to have one LISA that is a SS LISA.

If you're saving for a property then it's generally recommended on here to stay in cash rather than investing, so you might wish to reconsider if that's the most appropriate direction - when would you anticipate buying?

masonic

GD7 said:

I then thought I could open an AJ Bell SS LISA as they accept transfers. I have however already deposited into my HL SS LISA this year so do I have to wait until 2022 to open an AJ Bell SS LISA? Even if I dont deposit any new money into it, but just transfer the MB Cash LISA in full to the AJ Bell?

If your end-game is to have a single S&S LISA, and MoneyBox are not playing ball, then I suggest you transfer your cash and S&S LISA to AJ Bell. You don't have to wait until 2022, you can open a new LISA now provided you don't pay any new money into it.

Unless you believe it will be 10+ years before you buy, or you'd be happy to delay if your investments take a dip, then it would be unwise to invest money you plan to use towards the purchase.

GD7

eskbanker said:

GD7 said:

1. (2) I know that you cannot open two LISAs or deposit into two LISAs in the same tax year, but can I open a new LISA if I have already deposited into a different one in that same tax year, so long as I dont deposit any new money into the new one?
   

My understanding is that yes, as you can generally open as many ISAs as you like but only pay new money into one of each type per tax year, this applies to LISAs.

Thank you for this. It seems that this might be a bit of a grey area, is there anyone I can ask who would be able to definitely confirm or deny this? I assume an assistant at AJ Bell or something like that

eskbanker said:

GD7 said:

My end game is to have one LISA that is a SS LISA.

If you're saving for a property then it's generally recommended on here to stay in cash rather than investing, so you might wish to reconsider if that's the most appropriate direction - when would you anticipate buying?

I would estimate that we wouldn't be buying a property for at least 3 years from now



I have also just remembered a third question I had

The government website says "On completion of the purchase, the Lifetime ISA investor must occupy the property as their only or main residence." but does anyone know if there is a minimum time you must live there?

For example if I use the LISA to buy a house, and we live there for 1 year before decide to move, is that allowed?
Also what if we lived there but then decided we could afford to buy a second house and rent out the first one, would that not be allowed as the first house was bought using a LISA?

eskbanker

GD7 said:

eskbanker said:

GD7 said:

1. (2) I know that you cannot open two LISAs or deposit into two LISAs in the same tax year, but can I open a new LISA if I have already deposited into a different one in that same tax year, so long as I dont deposit any new money into the new one?
   

My understanding is that yes, as you can generally open as many ISAs as you like but only pay new money into one of each type per tax year, this applies to LISAs.

Thank you for this. It seems that this might be a bit of a grey area, is there anyone I can ask who would be able to definitely confirm or deny this? I assume an assistant at AJ Bell or something like that

Tricky - HMRC own the rules but with them, and any providers, you're at the mercy of their front-line customer-facing staff, who may or may not know the answer or where to find it!

GD7 said:

eskbanker said:

GD7 said:

My end game is to have one LISA that is a SS LISA.

If you're saving for a property then it's generally recommended on here to stay in cash rather than investing, so you might wish to reconsider if that's the most appropriate direction - when would you anticipate buying?

I would estimate that we wouldn't be buying a property for at least 3 years from now

Stick to cash then, that's too short a timeframe to be investing, unless you have a particularly high risk tolerance.

GD7 said:

I have also just remembered a third question I had

The government website says "On completion of the purchase, the Lifetime ISA investor must occupy the property as their only or main residence." but does anyone know if there is a minimum time you must live there?

For example if I use the LISA to buy a house, and we live there for 1 year before decide to move, is that allowed?
Also what if we lived there but then decided we could afford to buy a second house and rent out the first one, would that not be allowed as the first house was bought using a LISA?

No definitive minimum timescale specified that I'm aware of, but the government apparently confirmed that they'd take a common sense view....

https://blog.moneysavingexpert.com/2016/04/can-you-rent-out-a-home-bought-with-a-help-to-buy-isalifetime-isa/

masonic

GD7 said:

Thank you for this. It seems that this might be a bit of a grey area, is there anyone I can ask who would be able to definitely confirm or deny this? I assume an assistant at AJ Bell or something like that

It isn't a grey area, what you intend to do (open a new LISA for the purpose of transferring in) is allowed whether or not you have opened and/or paid into another LISA during the same tax year.

GD7 said:

The government website says "On completion of the purchase, the Lifetime ISA investor must occupy the property as their only or main residence." but does anyone know if there is a minimum time you must live there?

For example if I use the LISA to buy a house, and we live there for 1 year before decide to move, is that allowed?
Also what if we lived there but then decided we could afford to buy a second house and rent out the first one, would that not be allowed as the first house was bought using a LISA?

You must intend to live there for the foreseeable future. If you decide to move house, and sell the original property in order to buy a new one (i.e. the equity in property the Government money allowed you to buy would follow you to your new residence), even after a year or less, then this would not raise any eyebrows. However, if you lived there a short while before renting the property out, that would be a grey area.

DTPASCOE

Please can someone clarify for me.

I hold a lisa that I transferred into from a help to buy in the first year Lisa's became available. I moved from a cash lisa to a stocks and shares lisa last year.

I understand that if I withdraw to help fund a foreign property purchase I will loose the government bonus. However can someone clarify is the additional 5% on the remaining balance i.e including any interest gained or is it only on the funds that I have deposited? My thinking being does the increase by interest potentially negate the fine fee.

I believe I am probably wrong in this thinking but would be good to have this settled so I can put a nail in it.

 Thanks in advance

eskbanker

The penalty is 25% of the amount withdrawn.

Olliehiggins

Hi all - does anyone have experience with transferring LISAs to consolidate into 1? Basically my situation is:

- i have a LISA >12months old
- my wife has a LISA <12months old (anniversary at the end of April), with 5k in.

We have just reserved a new build and the developers want to exchange at the end of March, so before my wife's LISA reaches 12 months old. As far as I see it, unless I can get them to agree to wait until the end of April, I'm going to need to withdraw the 5k from my wife's LISA and take the penalty, losing £1.25k.

UNLESS... the below would work, which I'd welcome some guidance / comments on:

- My current LISA is with Nutmeg (not accepting transfers in). 
- If i transfer my LISA to another provider that does accept transfers, say AJ Bell, as far as i understand it, the clock would not restart, my LISA would be ready to use straight away.
- If i transfer my wife's LISA into the new LISA with the new provider, would the combined LISA adopt the opening date of the oldest LISA i.e. mine, that is >12 months old, and therefore be available to use in full?

If the above is possible, is it a realistic timeframe to transfer my LISA into a new provider and then transfer my wife's LISA into the same pot to make a combined LISA within 5/6 weeks, or am i pushing my luck and should just take the penalty charge to withdraw from my wife's current LISA?

eskbanker

As with all ISAs, they're individual accounts, so it isn't possible to transfer from one person's ISA to someone else's, or to combine them between individuals.