Opened two Lifetime ISAs, is it possible to choose which one to close?

jamiekitson

I didn't realise that you could only open one Lifetime ISA within one tax year and that you could have a mixed cash and shares ISA so I opened one of each. I would much rather keep the shares LISA, but since I opened that one second I am being told I have to close that one. Since I am now 40 I cannot open another. Is there any way I can close the first LISA I opened, the cash LISA?

eskbanker

Under the scheme rules you are allowed to open a LISA after 40 if it's to be used for transferring in an existing one, but I believe that it's been reported on here previously that at least one of the providers effectively precludes this because of software inadequacies.  Likewise not all LISA providers accept transfers from other LISAs anyway.

Can you transfer your cash LISA into the S&S one?  Have you paid into both?

jamiekitson

Thanks. I have paid into both and unfortunately my S&S provider does not accept transfers in. It's good news that it is potentially possible.

Alexland

I am aware that HL doesn't accept LISA transfers-in (unless they have recently changed their policy) and AJ Bell don't allow you to open a LISA if over 40 (unless they have recently fixed their software). Assuming you have made no more than £4k contributions in total have you considered if Nutmeg or Moneybox could support you in transfering both in? It would mean you are stuck with their pecentage based fees as the account gets larger.

Another option that might work would be to transfer the Cash LISA into another type of ISA account although the withdrawal penalty would apply to that amount. That would leave you at the end of the tax year with just the second S&S LISA being reported to HMRC. Although HMRC are probably already aware of the second LISA so it's worth getting their feedback.

masonic

As a bonus claim will have been made by two different LISA providers in the same tax year, I'd caution against taking any action that would result in your valid LISA (the cash LISA) being closed (other than being transferred to another LISA). This could leave you ineligible to use a LISA now that you are 40. I think in this case you need to contact HMRC and follow what they say, there isn't any way to make the situation right yourself.

Alexland

Yes from memory HMRC would become aware of the second LISA via the online account opening API even before the bonus claim relating to the initial deposit.
In the OPs situation I would probably accept the second LISA is invalid and then try transferring the first LISA to another S&S LISA provider next year. I seem to remember AJ Bell did say to another forum user it was their intention to fix their software to allow an existing LISA holder over 40 to perform a transfer eventually.