Claim lifetime ISA bonus before 'officially' paid into account

JammyJoel

I am a FTB, currently in the process of purchasing my first property.

I've got my mortgage sorted, and my solicitor is currently sorting all the paperwork. However, it looks like the sale is going to go into the new tax year. If I deposited the maximum £4,000 on April 6th, the £1,000 bonus is normally paid in late May/early June - but I don't think (or hope) the sale will go that far.

My question is; if I deposited the maximum £4,000 on April 6th and the sale goes through BEFORE the £1,000 bonus is paid, is it possible for my solicitor to claim the bonus on my behalf? OR does the bonus only exist when it is 'officially' paid in?

It's not the end of the world, since I've already got my finances sorted but I wouldn't turn down a free £1,000!

Alexland

If the bonus money is not in the LISA at the point the solicitor makes the penalty free withdrawal for the qualifying property purchase it should still be added later (check with your provider that they will still claim it - maybe ask the solicitor to make partial withdraw to be sure the account isn't closed) then you can continue to add money and get 25% bonuses in subsequent tax years until you are 50 for withdrawal from 60. If the LISA is a cash account you may then wish to transfer it to a S&S provider (very limited choice if transferring after age 40) so you can invest in assets that are likely to provide an above inflation long term return. Even if you wanted to withdraw the bonus money after the purchase you would get £750 of it.

Once you are past the first time buyer mindset you may find a new appreciation for your LISA.in helping you invest towards your long term goals.

JammyJoel

Thanks for the advice!
I never realised I could keep using it after purchasing a property - I assumed it was FTB or pension, not both, so that's good news! I've got 20 years left until my age starts with a 5, so I'll definitely look into that!

Alexland

Well it wouldn't technically be a pension as they have their own rules and benefits (which can be greater than investing with a Lifetime ISA depending on circumstances) but it's a pot of money you can access from age 60. As homeowners we are using ours to invest money to gift to our children house deposits (maybe on a savings matching scheme so they have to put some effort in), maybe buy some new cars in retirement and/or recycle some into a pension until age 75 for extra benefit, etc.

eskbanker

JammyJoel said:

If I deposited the maximum £4,000 on April 6th, the £1,000 bonus is normally paid in late May/early June - but I don't think (or hope) the sale will go that far.

My question is; if I deposited the maximum £4,000 on April 6th and the sale goes through BEFORE the £1,000 bonus is paid, is it possible for my solicitor to claim the bonus on my behalf? OR does the bonus only exist when it is 'officially' paid in?

It's permitted to make multiple withdrawals from a LISA towards a first time property purchase, as per https://www.gov.uk/guidance/lifetime-isa-withdrawals-for-a-first-time-residential-purchase#withdrawals-for-a-first-time-residential-purchase

Investors can make one single or several charge-free withdrawals from a Lifetime ISA for a first time residential purchase....

so check with your solicitor to see if accessing the £1,000 bonus a bit later than the rest would be acceptable - you/they do need to declare that the LISA money is being used towards the price of the property but there may be some room for flexibility in scheduling payments....

Alexland

eskbanker said:

so check with your solicitor to see if accessing the £1,000 bonus a bit later than the rest would be acceptable - you/they do need to declare that the LISA money is being used towards the price of the property but there may be some room for flexibility in scheduling payments....

But to be within the rules it would probably require the contract to be restructured to include a post-completion payment to the seller in relation to the purchase but that might require more bespoke legal work than the potential £250 benefit (especially as solicitors can charge £50+vat just for a routine withdrawal) and a sympathetic seller who is willing to wait for some of the money with the risk they have to chase it. Of if you are 'lucky' to get a solicitor that just doesn't care they might put a second claim in and just give you the money but you have to ask yourself if you really want such a careless person working for you...

eskbanker

For the avoidance of doubt I'm not suggesting that OP asks the solicitor to break, or even bend, any rules, and certainly wasn't proposing that money from the LISA is given back to OP after the event or even that payments to the seller are necessarily affected - I was just speculating that the solicitor may be willing to be flexible about exactly when their bill is settled, so no harm in asking them the question....