Lifetime ISA closed after house purchase? 27 November 2020 at 3:28PM in ISAs & Tax-free Savings 3 replies 81 views

JakeMM

If I cash in my Lifetime ISA following a house purchase, am I correct in thinking that I can't continue with the account for retirement?

It's for EITHER a house purchase, OR retirement, and not both?

Ed-1

JakeMM said:

If I cash in my Lifetime ISA following a house purchase, am I correct in thinking that I can't continue with the account for retirement?

It's for EITHER a house purchase, OR retirement, and not both?

No, you can make a penalty-free withdrawal from your LISA(s) towards buying a house and continue to use it/them for saving for retirement and then make further penalty-free withdrawals upon reaching age 60.

You can have a new LISA every tax year if you want up to age 40.

eskbanker

JakeMM said:

If I cash in my Lifetime ISA following a house purchase, am I correct in thinking that I can't continue with the account for retirement?

It's for EITHER a house purchase, OR retirement, and not both?

To add to the above response, if you wished, you could keep the same LISA going past your first property purchase by withdrawing slightly less than the full balance (e.g. leaving a token quid in there) rather than fully closing it, but it would typically make more sense to use a cash LISA for saving for a deposit but then a S&S variant for long-term retirement money anyway.

Alexland

It's your solicitor (not you) that makes the penalty free withdrawal so ensure they are clear on the need to make a partial withdrawal of a specified amount if you want the account left open. However if you have already used the full contribution allowance for the year and will still be under 40 in the next tax year you could always let it get closed and open another one on the 6th April. If you will be over 40 at the start of next tax year then you might want to move it to a S&S LISA in advance (even if you don't invest the money) as there is currently a problem in the market where S&S LISA providers are not accepting transfer requests from over 40s.