Borrowing from a LISA

ani*fan

I have a quick question about LISA savings accounts.

Everything I've read says there is a 25% penalty for withdrawing before the age of 60 for anything other than a first time house purchase.

I've also read there is an idea about making the LISA similar to the American 401k in that we'd be able to borrow up to 50% of the value with no penalty but perhaps with some interest, as long as it was paid back within 5 years.

Does anyone know if there are plans to make a decision about this? Or when that will be?

Thanks you clever people.

eskbanker

According to https://www.whatdotheyknow.com/request/lifetime_isa_flexibility there was some early speculation last year that there would be 401K-style flexibility built in but this didn't make it into the scheme rules on introduction, which explicitly state (in clause 6.77a) that "Lifetime ISAs cannot be offered as flexible ISAs".

In the response to the FOI request, the Treasury refused to answer the question "Can the Treasury provide any information on its current plans and any broad timetable for when a policy decision on Lifetime ISA flexibility is due?" so unless there has been any subsequent update it would appear that nobody is letting on if there are any such plans!

If I was considering funding a LISA I think I'd assume that the rules will stay as they are rather than expecting to be able to shift money out and back again....

ani*fan

Thanks for that.

You're right, I won't plan around being able to do this. Shame though, it would be way more appealing with some flexibility. Even a limited number of withdrawals over the accounts lifetime would work better.

Ah well.

Ed-1

ani*fan wrote: »

Thanks for that.

You're right, I won't plan around being able to do this. Shame though, it would be way more appealing with some flexibility. Even a limited number of withdrawals over the accounts lifetime would work better.

Ah well.

It was George Osborne's pet project. Come back Gideon! All is forgiven!