I lost £2k in LISA withdrawal charges - any chance to recoup?

masonic

hardleyouth said:

hardleyouth said:

grumiofoundation said:

hardleyouth said:

Hi, 

The penalty charge takes more than just the govt bonus away, e.g. you deposit £1k and receiving a 25% bonus making your account total £1,250.  If the government then takes a 25% withdrawal fee (25% of £1250) you lose £312.50, leaving you with £937.5 - less than you deposited. 

It's also worth noting that I had successfully invested the funds so that £8k wasn't just deposits and bonuses, it was growth too.  The government charge therefore took back the bonus and took my own capital and growth.   The bulk of what the charge took is bonus, and I'm fine with them recouping that from me, but they also took a chunk of my own money with it and that's what I want to pursue. 

I recognise that S&S LISAs are a long-term investment product, however people do find themselves in unexpectedly bad financial situations, as I'm sure the people of this forum should be aware.  Sadly, I found myself in that situation and believe me withdrawing my LISA was my last resort after I had exhausted all other options and savings, unfortunately. 

Yes the charge has always been controversial, including with Martin Lewis himself.  It's controversial to fine people for withdrawing savings due to financial difficulty, something the government overly and clearly now acknowledges given the change in policy due to coronavirus - how is current financial difficulty distinct from it happening not during a pandemic? 

When you signed up for the product you agreed to these terms - that if you withdrew for any purpose other than purchase or retirement the government would take back more than they had paid in bonus. 

You could argue the penalty charge is controversial but the government is giving you the opportunity to get. 25% bonus on your house deposit (I'm sure people thought/think the LISA scheme is in itself controversial). 

Having said that there is obviously no harm in appealing to try and ask for the penalty back (the fact the bonus has been now reduced from 25% to 20% may help?) but I would prepare for this to be unsuccessful. 

Thanks.   Do you know what route I might take to appeal this?  When i had to withdraw before I pleaded with HL to provide me with the relevant govt contact details but they were entirely unhelpful.  I then fished out an e-mail for a savings team at HMRC but I received that boilerplate response, so I'm not really sure where I need to send my appeal? 

Sorry to dig this back up, but does anyone know where or how I might appeal for this?  Is HMRC my best bet and if so does anyone know what team? 

The only way to appeal a law that you think was unfair is via your local MP. Only the Government is in a position to help you now, and they might not consider it (a) appropriate and (b) a priority.

grumiofoundation

hardleyouth said:

hardleyouth said:

grumiofoundation said:

hardleyouth said:

Hi, 

The penalty charge takes more than just the govt bonus away, e.g. you deposit £1k and receiving a 25% bonus making your account total £1,250.  If the government then takes a 25% withdrawal fee (25% of £1250) you lose £312.50, leaving you with £937.5 - less than you deposited. 

It's also worth noting that I had successfully invested the funds so that £8k wasn't just deposits and bonuses, it was growth too.  The government charge therefore took back the bonus and took my own capital and growth.   The bulk of what the charge took is bonus, and I'm fine with them recouping that from me, but they also took a chunk of my own money with it and that's what I want to pursue. 

I recognise that S&S LISAs are a long-term investment product, however people do find themselves in unexpectedly bad financial situations, as I'm sure the people of this forum should be aware.  Sadly, I found myself in that situation and believe me withdrawing my LISA was my last resort after I had exhausted all other options and savings, unfortunately. 

Yes the charge has always been controversial, including with Martin Lewis himself.  It's controversial to fine people for withdrawing savings due to financial difficulty, something the government overly and clearly now acknowledges given the change in policy due to coronavirus - how is current financial difficulty distinct from it happening not during a pandemic? 

When you signed up for the product you agreed to these terms - that if you withdrew for any purpose other than purchase or retirement the government would take back more than they had paid in bonus. 

You could argue the penalty charge is controversial but the government is giving you the opportunity to get. 25% bonus on your house deposit (I'm sure people thought/think the LISA scheme is in itself controversial). 

Having said that there is obviously no harm in appealing to try and ask for the penalty back (the fact the bonus has been now reduced from 25% to 20% may help?) but I would prepare for this to be unsuccessful. 

Thanks.   Do you know what route I might take to appeal this?  When i had to withdraw before I pleaded with HL to provide me with the relevant govt contact details but they were entirely unhelpful.  I then fished out an e-mail for a savings team at HMRC but I received that boilerplate response, so I'm not really sure where I need to send my appeal? 

Sorry to dig this back up, but does anyone know where or how I might appeal for this?  Is HMRC my best bet and if so does anyone know what team? 

Since its not clear what your appeal will be based on as said MP seems the only option really.

Don't really see how you can complain to HMRC since you followed the rules of the product you signed up for?

What will your appeal say?

d63

could the OP perhaps claim he was given poor advice at the time? not made sufficiently aware of the early withdrawal problems?
https://corporate-adviser.com/fca-spells-lisas-five-risks-consumers/

eskbanker

d63 said:

could the OP perhaps claim he was given poor advice at the time? not made sufficiently aware of the early withdrawal problems?
https://corporate-adviser.com/fca-spells-lisas-five-risks-consumers/

Highly doubtful that there was any advice given as such, in the defined 'financial advice' sense, but in terms of generic product data provision it seems unlikely to have been deficient - OP doesn't say exactly when they opened the LISA but does confirm that it's with HL, who have always been upfront about the 25% early withdrawal charge (as well as stressing the importance of investing for the long term).  The first version of their product page available in the web archive (April 2017) is quite clear on this, without even having to start on reading the Ts &Cs - the very first paragraph clarifies:

Important information - please remember that the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. If you are unsure of the suitability of your investment please seek advice. Tax rules can change and the value of any benefits depends on individual circumstances. Investing should be considered over the long-term. Money in a Lifetime ISA can be withdrawn to purchase a first home or at age 60. Early withdrawals will usually be subject to a 25% penalty.

and this is emphasised further down the page:

Withdrawing the money early

If you withdraw the money before age 60 and it’s not to purchase your first home, you'll pay a 25% government withdrawal charge on any money you withdraw (except if you’re diagnosed with a terminal illness). This means you may get back less than you put in.

As can be seen from earlier posts, OP could claim ignorance, but not with any credibility or prospects of success IMHO....

masonic

There is also the Lifetime ISA declaration to which the individual must agree before opening a LISA. This includes the statements:

I declare that... I agree to the Lifetime ISA terms and conditions AND

I authorise [ISA manager’s name]... to withhold and deduct from a balance in the Lifetime ISA and to pay to HMRC any charges due on withdrawals

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/695979/Application_Form__Lifetime_ISA_.pdf