Lifetime ISA Hacks?

MikeyBeLike

So I’m looking to purchase my first property soon and last year decided to open up a LISA account. So from my understanding the government give you 25% of what you save every year up to a maximum of £1000 and from what I see that 25% is paid into your LISA the following month.

Currently I have only £100 in my LISA from when I opened it, and the 1 year is coming to an end. If I put in the remaining £3900, I believe I would get the £1000 bonus the following month.

My question is can I then put in another 4k shortly after my initial year ends and get another 1k? So that I essentially get 2k bonus shortly before I buy?

I know it seems hacky, but it doesn’t seem to be illegal at least?

Zorillo

That's not a hack. That's exactly how it is designed to work

MikeyBeLike

Zorillo wrote: »

That's not a hack. That's exactly how it is designed to work

So you mean for example: If my initial 12 month period ends at the end of March, I can put in the remaining balance up to 4k by the end of feb, receive the remaining 25% in March and then immediately put in another 4k beginning of April and receive another 1k the following month? And then begin purchasing my property in that same month?

Sorry i'm quite new to this type of stuff (they don't teach it in school) so it just feels like i've had a eureka moment, it sounds like this is quite a common thing though lol

Alexland

The £4k contribution allowance is per Tax Year running from 6th April to 5th April each year.

For example if a new LISA was opened now with £4k then another £4k could be added in a few months time on 6th April.

Alex

eskbanker

MikeyBeLike wrote: »

So you mean for example: If my initial 12 month period ends at the end of March, I can put in the remaining balance up to 4k by the end of feb, receive the remaining 25% in March and then immediately put in another 4k beginning of April and receive another 1k the following month? And then begin purchasing my property in that same month?

Just to add to the above, the bonus payments are aligned to claim periods from the 6th of one month to the 5th of the following month, and will take up to about 28 days from the end of each such period.

So, if you top up as soon as the new tax year starts, the associated bonus won't be in your account until very late May or early June - worth bearing in mind if your property purchase is imminent....

MikeyBeLike

Alexland wrote: »

The £4k contribution allowance is per Tax Year running from 6th April to 5th April each year.

For example if a new LISA was opened now with £4k then another £4k could be added in a few months time on 6th April.

Alex

Oh wow that's so useful to know. I assumed it was aligned with when my LISA was opened.

Sapphire

MikeyBeLike wrote: »

So I’m looking to purchase my first property soon and last year decided to open up a LISA account. So from my understanding the government give you 25% of what you save every year up to a maximum of £1000 and from what I see that 25% is paid into your LISA the following month.

This is just a polite question.

Did your school teach you to start paragraphs (and further sentences in same paragraphs) with the word 'so'? Both the above sentences would work fine without the word 'so', and it is grammatically incorrect to use the word in the way you have.

Sorry, but I couldn't resist asking you this – it makes me switch off any time I hear a 'celebrity' (or even someone who is reputed to be intelligent), use 'so' in this way.

Alexland

MikeyBeLike wrote: »

Oh wow that's so useful to know. I assumed it was aligned with when my LISA was opened.

You are probably thinking of the minimum 12 months before it can be used without penalty by your solicitor for a qualifying property purchase.

Alex

Wildsound

Sapphire wrote: »

This is just a polite question.

Did your school teach you to start paragraphs (and further sentences in same paragraphs) with the word 'so'? Both the above sentences would work fine without the word 'so', and it is grammatically incorrect to use the word in the way you have.

Sorry, but I couldn't resist asking you this – it makes me switch off any time I hear a 'celebrity' (or even someone who is reputed to be intelligent), use 'so' in this way.

So are you saying that what he is saying is wrong? :A

MikeyBeLike

Sapphire wrote: »

This is just a polite question.

Did your school teach you to start paragraphs (and further sentences in same paragraphs) with the word 'so'? Both the above sentences would work fine without the word 'so', and it is grammatically incorrect to use the word in the way you have.

Sorry, but I couldn't resist asking you this – it makes me switch off any time I hear a 'celebrity' (or even someone who is reputed to be intelligent), use 'so' in this way.

This is just a polite reply. But did life teach you to be a !!!! to random strangers looking for help?

This isn’t an English exam, I’m writing how I would speak.

Thank you everyone else for your helpful purposeful replies 😊

Wildsound

When are you looking to buy? If the time is a while away, then another "hack" to consider is also getting a help to buy ISA to benefit from the higher than normal savings account rates which compound the whole balance until you close the account.

You can't get the bonus on both, but the idea with the HTB ISA is not to get the bonus on it, only to pocket the interest and close the account when you buy (assuming your only intention of using the LISA is for a house purchase and not for retirement).

However, with HTB ISA interest rates coming down and the new accounts due to close at the end of this year, this "hack" only really becomes viable if you are either on a historic high rate which has yet to come down (some very early accounts still have near 4% interest) or if your time horizon is further down the line and you don't expect the interest rates on the accounts (as they are variable) to go any further down after they close to new business.

If you're looking to buy in the next 2 years, then the above will likely not give any benefit over just using regular savers (some giving 5%) and then recycling the money into instant savings accounts on maturity when you start again the following year. If you are a high earner and able to max out current accounts and regular savers and have no where else to go, then the above would then come back into play as an additional savings vehicle.