Isa

aebms

Hello. My son already has a help to buy isa. Can he also have a Lifetime isa (LISA) and pay into them both every year?

Alexland

Yes they are different types of ISA so it's fine to contribute to both in the same tax year however he can only use one account towards a qualifying property purchase. If he does not use the LISA for the property purchase then the LISA early withdrawal penalty would continue to apply until age 60.

aebms

Thanks for that. With the help to buy isa he has to use that towards a house purchase and he gets a yearly bonus. He would also get the yearly bonus if he paid into the LISA. However, if he can only use one towards a house purchase, how would this affect the bonuses that he accrued?

Alexland

The HTB ISA 25% bonus is claimed by the solicitor after the account is closed based on the final account balance including interest. No bonus is added during the life of the account.

The LISA bonus is added into the account a few weeks after the contribution has occurred. The effect of the LISA early withdrawal penalty is a 6.25% loss of capital. For example a £4,000 contribution would gain a 25% bonus of £1,000 to become £5,000 then the 25% early withdrawal penalty would be £1,250 leaving £3,750. A solicitor is allowed to make a penalty free LISA withdrawal before the age of 60 for a qualifying property purchase.

Alex