Lifetime ISA - can you reopen?

triplea35

Our son is 25 and with a little help from Bank of Mum and Dad he has a Help to Buy Isa, Lifetime Isa and a SIPP.

I particularly like the Lifetime ISA over the SIpp (if rules remain the same) as he appears to get the tax bonus at the start like a SIPP but any income he draws from it on retirement will be tax free.

The cash Help to Buy ISA, although paying a reasonable rate of interest so worth having, will not be as large as the Lifetime ISA when he comes to house purchase in a few years.

I understand you can only take the tax benefits from either of the ISA's for house purchase but not both.

As the Lifetime ISA will have the larger amount in it, will it be possible to draw on it for house purchase and then reopen/continue to invest in one until age 50?

masonic

Yes, it isn't necessary to close the LISA when making a withdrawal for a house purchase and it won't have any impact on his ability to keep using it.

AimHigh

As masonic says, you can continue to use the LISA post house purchase but a HTB would then be useless.

It may just be the subtle wording of your post, i.e. the LISA will have the larger amount in it, which suggests to me that you're looking to use either the LISA or HTB towards the house purchase. If possible, transfer the HTB balance across to the LISA first (taking into account any contributions into the HTB in ths same tax year will count towards your 4k annual allowance) so you can get the bonus on the full amount.

Chances are that's exactly what you're planning to do but no harm in checking

eskbanker

triplea35 wrote: »

I understand you can only take the tax benefits from either of the ISA's for house purchase but not both.

The rule is actually that you can't take advantage of the 25% government bonus on both a HTB and a LISA if making a first-time property purchase. The tax benefit continues to apply for any and all ISAs though....

AimHigh wrote: »

If possible, transfer the HTB balance across to the LISA first (taking into account any contributions into the HTB in ths same tax year will count towards your 4k annual allowance) so you can get the bonus on the full amount.

Just to be clear, anything transferred from a HTB to a LISA counts towards the £4K annual LISA allowance - the distinction between current and prior tax year contributions no longer applies since the start of the 2018/19 year.

AimHigh

eskbanker wrote: »

Just to be clear, anything transferred from a HTB to a LISA counts towards the £4K annual LISA allowance - the distinction between current and prior tax year contributions no longer applies since the start of the 2018/19 year.

Oh really? Apologies for the misinformation! Didn't realise that was the case.

aj23_2

triplea35 wrote: »

Our son is 25 and with a little help from Bank of Mum and Dad he has a Help to Buy Isa, Lifetime Isa and a SIPP.

I particularly like the Lifetime ISA over the SIpp (if rules remain the same) as he appears to get the tax bonus at the start like a SIPP but any income he draws from it on retirement will be tax free.

The cash Help to Buy ISA, although paying a reasonable rate of interest so worth having, will not be as large as the Lifetime ISA when he comes to house purchase in a few years.

I understand you can only take the tax benefits from either of the ISA's for house purchase but not both.

As the Lifetime ISA will have the larger amount in it, will it be possible to draw on it for house purchase and then reopen/continue to invest in one until age 50?

if using LISA for a house deposit or mortgage, you don't have to use the whole balance or close it. You can take it down to £1 and keep it open, but if you've already deposited £4,000 in that tax year, you'd have to wait until the next tax year to add another £4,000.