Opening second Lisa

northernerinmidlands

Thinking of opening a second Lisa in April .Currently have stocks and share lisa but considering adding future contributions to a cash lisa. Will this reset the tme before the lisa can be used for a property purchase without incurring the government penalty?

eskbanker

northernerinmidlands wrote: »

Thinking of opening a second Lisa in April .Currently have stocks and share lisa but considering adding future contributions to a cash lisa. Will this reset the tme before the lisa can be used for a property purchase without incurring the government penalty?

My interpretation of https://www.gov.uk/guidance/lifetime-isas-for-isa-managers#withdrawals-for-first-time-residential-purchase is yes, the second LISA would need to be open for 12 months:

12 month rule

An investor can only make a charge-free withdrawal for a first time residential purchase from their account 12 months after the date of their first payment into their LISA.

The 12 month rule applies to each separate LISA that an investor may have opened.

If an account was transferred to the current ISA manager then 12 month rule applies to the date that the account was originally opened before it was transferred.

Since transfers preserve the original opening date, why don't your transfer your existing LISA from S&S to cash, for use with a property purchase, and then open a S&S one after April for your long-term money?

northernerinmidlands

Thank you.
I'd looked into moneybox cash LISA and it just said you can have more than one but only pay into one per year. It was the Skipton LISA frequently asked questions pages that mentioned the need to wait 12 months after opening each separate LISA. Thanks for the clarification.
I think transferring the original Lisa might be a better option in that case.
Thank you for your help.

Alexland

Yes if you intend to make the property purchase in the next 5-7 years then continuing with a S&S LISA would be unsuitable as there is a reasonable chance it would underperform a cash product in adverse market conditions. Unfortunately not all S&S LISA providers have been clear on this point and some have claimed their product is generally suitable for first time buyers.

S&S LISAs are really only intended for those of us investing to withdraw from age 60 or those for who the property purchase is a very long time away (although by then with inflation the £450k price limit might be an issue).

By transferring your existing LISA the clock won't restart although if buying soon you might want to keep a statement from your old provider to prove how long you had the account if required.

Alex

northernerinmidlands

Thanks for your advice, Yes the current LISA is with HL and done well so far but I have started selling funds as the markets rising and realised the cash balance interest is so low that transferring makes more sense.
Good point about printing off a statement, I hadn't considered that.
Thank you