MSE News: 'First cash Lifetime ISA now available – but likely to be only one for now

Former_MSE_Ben_S

No other providers plan to follow the lead of Skipton Building Society and launch a cash Lifetime ISA ...

Read the full story:
'First cash Lifetime ISA now available – but it’s likely to be the only one for a while'

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veryintrigued

Ben.

Why do keep starting threads on LISAs in this section rather than the 'ISAs and Tax Free Savings' section?

binaryuniverse

I've opened one, to get the clock running. Should some other providers come along then I can do a transfer.

Main concern, for me, is what happens if I need access to that cash (some form of emergency) that involves me losing money to get at it. The bonus I don't mind losing. So be it. But to charge me 25% on top as well?

Still, I have some 10 months before I need to decide on that.

Kim_13

binaryuniverse wrote: »

I've opened one, to get the clock running. Should some other providers come along then I can do a transfer.

Main concern, for me, is what happens if I need access to that cash (some form of emergency) that involves me losing money to get at it. The bonus I don't mind losing. So be it. But to charge me 25% on top as well?

Still, I have some 10 months before I need to decide on that.

It's 5% on top I believe. If the money was in a pension it would also be locked away so it's not so different, but should someone fall on hard times and need to make a claim for means tested benefits, the LISA money could exclude them and force them to pay the charge. A pension pot is disregarded in such a claim, as far as I'm aware.

eskbanker

binaryuniverse wrote: »

Main concern, for me, is what happens if I need access to that cash (some form of emergency) that involves me losing money to get at it. The bonus I don't mind losing. So be it. But to charge me 25% on top as well?

You wouldn't lose the bonus and another 25% on top as well!

If you withdrew this tax year (before any bonus payment) then you'd get back all you'd paid in.

If you withdrew later, you'd be charged 25% of the bonus-inclusive figure, which effectively means losing the bonus and another 6.25%.

binaryuniverse

That's not according to Skipton's page. If I were deposit £4000, and then withdraw, in year two, I'd lose the bonus plus a further £250.

eskbanker

Yes, those Skipton figures tally exactly with mine! If you withdraw £5K after receiving the bonus, the penalty is 25% of the bonus-inclusive figure of £5K, i.e. £1,250, which can be broken down as losing the £1K bonus and also another 6.25% (of the £5K), i.e. £250.

Edit: think we're at cross purposes! When you said 25% on top you must have meant 25% of the bonus not an extra 25% deduction from the amount being withdrawn.... So, yes, the penalty charge is 125% of the bonus, to incentivise savers only to use it for the intended purpose(s).

binaryuniverse

But it is an extra 25% of the bonus amount.
Either way, regardless of how either of us want to look at a percentage figure, in real terms it's £250 lost from my initial pay in (not counting any interest).

And that is hardly a good deal.

Dom_Fletch89

Just thought I'd leave some of the important points here from the Skipton Lifetime ISA documents that I got sent through yesterday once I'd set my account up. Set up was easy and took about 10 minutes to set up accounts for myself and partner. This is mainly for the purposes of people considering opening an account with the sole intention of using it towards buying their first house

C – Qualifying criteria for house purchase
Owning your own home is an exciting prospect.You can use your Lifetime ISA to help buy your home as long as the following criteria are met:
• You have held your Lifetime ISA for at least 12 months
• If you are buying with someone else, you can both use a Lifetime ISA as long as neither of you has owned a property previously
• The value must not exceed £450,000
• The property must be purchased in the UK with a mortgage, but not a buy to let mortgage unless you, or your spouse or civil partner,
are a UK Crown employee serving overseas and intend to use the property as your main residence in future
• You must occupy the property as your main residence immediately on completion, or if you or your spouse/civil partner are a UK Crown employee serving overseas, you must intend to in future

D – Can I make more than one withdrawal when I come to buy my first home?
You can make more than one charge-free withdrawal and there’s no minimum withdrawal amount. For example, you may have more than one Lifetime ISA and you may need to phase your withdrawals during your house purchase.

E – How do I make a withdrawal to buy a house?
When you come to buy, you’ll need to tell your conveyancer you want to use part or all of your Lifetime ISA towards the purchase and provide them with a declaration. Your conveyancer also has to provide us with a declaration. It’s your responsibility to ensure this is provided, but your conveyancer should do this as part of the buying process. Once we receive the appropriate paperwork from your conveyancer we’ll pay the amount requested to the conveyancer within 30 days without applying the government withdrawal charge.

G - When is the 25% bonus paid into my account?
We will claim the 25% bonus from HMRC on your behalf. For the 2017/18 tax year, HMRC will pay the bonus within 28 days of 6 April
2018. From the 2018/19 tax year, onwards, HMRC will pay the bonus based on the contributions you have made each month. This will
be paid by HMRC within 4-9 weeks. The bonus is paid on all contributions made before you reach the age of 50.

Gavin83

binaryuniverse wrote: »

But it is an extra 25% of the bonus amount.
Either way, regardless of how either of us want to look at a percentage figure, in real terms it's £250 lost from my initial pay in (not counting any interest).

And that is hardly a good deal.

Depends how you look at it. It's certainly not a savings account, it's there for two possible purposes. If you think you might end up using it for something else it's probably not worth it.

However if you intend to use it to buy a house then it's silly not to take it up. In my case I know I'll be using it to buy a house so it's a free £1k (£2k counting my fianc!) each year.

binaryuniverse

Gavin83 wrote: »

However if you intend to use it to buy a house then it's silly not to take it up. In my case I know I'll be using it to buy a house so it's a free £1k (£2k counting my fianc!) each year.

Well exactly. This is my only reason for using one, also. I've only just started saving for a deposit, on a house. So I'm unlikely to be able to get one in the next 5-10 years, quite possibly longer. So the more I can put in to one of these things, and the earlier, the better.

But, hypothetically speaking, let's say you, for whatever reason, are unable to buy a house, or you need to get that cash urgently, as life has thrown a curveball at you (as it so often likes to). Then you lose out.