Lifetime ISA Transfer Question

Shickly

Hi there,
I currently hold a cash LISA and am considering transferring it over to a s&s LISA with a different provider.

However, there is a complication in that I have recently deposited £4k into the LISA and am awaiting the payment of the government bonus.

I was wondering if anybody knows what would happen regarding the payment of the government bonus if I transfer the LISA over to the new provider before receiving the bonus?

Any help is much appreciated. I have looked elsewhere online but have not found an answer.

Kind regards
Shickly

masonic

Why not wait for payment of the bonus before initiating the transfer? If you've recently made the £4k deposit then the bonus should be with you by the end of March. I can understand the rush to buy investments at discount prices, but they might be even cheaper in a few weeks time.

Alexland

Even if S&S investments are a bit cheaper at the moment its still worth ensuring that the LISA type is suitable for your purpose. Generally investment is only suitable if you don't need access to the money for 5-7 years to control the risk you withdraw less than you invested or could otherwise have achieved in a cash account.

Shickly

masonic said:

Why not wait for payment of the bonus before initiating the transfer? If you've recently made the £4k deposit then the bonus should be with you by the end of March. I can understand the rush to buy investments at discount prices, but they might be even cheaper in a few weeks time.

My plan all along was to wait for the bonus before moving over. More because of Brexit uncertainty than Covid 19. But I have a niggling feeling that the markets will have reached their trough and be back on the rise by the end of March, and I will have missed the opportunity.

Alexland said:

Even if S&S investments are a bit cheaper at the moment its still worth ensuring that the LISA type is suitable for your purpose. Generally investment is only suitable if you don't need access to the money for 5-7 years to control the risk you withdraw less than you invested or could otherwise have achieved in a cash account.

Yes, after much deliberation I am confident the s&s LISA is the right option for my circumstances. I'm looking to buy a house in pretty much exactly the period you've mentioned, so I'm looking to hold my money in some medium risk investment funds over that period. I've been looking into transferring for over a year, but back when I first looked the providers hadn't yet made it possible.

Kind regards,
Shickly

masonic

Shickly said:

My plan all along was to wait for the bonus before moving over. More because of Brexit uncertainty than Covid 19. But I have a niggling feeling that the markets will have reached their trough and be back on the rise by the end of March, and I will have missed the opportunity.

My suspicion is that the transfer won't be completed while there is an outstanding bonus claim from the sending provider. But it would be worth asking your S&S LISA provider.

Shickly

masonic said:
 My suspicion is that the transfer won't be completed while there is an outstanding bonus claim from the sending provider. But it would be worth asking your S&S LISA provider.

Ok, thank you for your input, I have tried to live chat my current provider earlier today, but with them being closed over the weekend I sent them an email which I'll most likely get a reply to next week. I have a similar suspicion, if so it's not the end of the world, it may be a good thing not to enter at such a volatile time.

Regards,
Shickly

eskbanker

https://www.gov.uk/guidance/lifetime-isas-for-isa-managers#transferring-lisas-between-lisa-managers

A LISA transfer:

• [...]
• can have any outstanding bonus claimed by the receiving ISA manager
• [...]

If the transferring ISA manager has submitted a claim to HMRC for a government bonus which has not been received before the transfer it’s their responsibility to transfer the government bonus to the receiving ISA manager.

Shickly

eskbanker said:

A LISA transfer:

• [...]
• can have any outstanding bonus claimed by the receiving ISA manager
• [...]

If the transferring ISA manager has submitted a claim to HMRC for a government bonus which has not been received before the transfer it’s their responsibility to transfer the government bonus to the receiving ISA manager.

Thank you! That's exactly the information I was looking for. Much appreciated.