LISA Bonus Deduction

grayj132

Afternoon all,

Bit of a weird one here. 

I had a LISA with Hargreaves & Lansdown for a First Time Buyer deposit. I accidentally used the incorrect form to withdraw my savings and lost my Government bonus. I appealed this with H&L who declined my appeal so went to the Financial Ombudsman who also stated that I could not have the decision reversed. 

I was able to borrow money from a family member to recuperate what I lost for the deposit, but was wondering if anyone might have any tips of what I may be able to do to gain back my bonus as I can prove it was used for a deposit, whether I go to H&L or HMRC. 

Many thanks! 

eskbanker

If you've already exhausted HL's appeal process, you can go to HMRC, as per https://www.gov.uk/guidance/lifetime-isa-withdrawal-charges-and-charge-free-withdrawals#when-an-investor-appeals-a-withdrawal-charge

tebbins

This is very worrying for me as I haven't used my LISA yet and it's with HL, do you have any details of the form you used, to help others in the same situation avoid this in future?
If HL are operating a LISA you would expect them to have foreseen issues like this and have systems in place to prevent it happening.

eskbanker

tebbins said:

This is very worrying for me as I haven't used my LISA yet and it's with HL, do you have any details of the form you used, to help others in the same situation avoid this in future?
If HL are operating a LISA you would expect them to have foreseen issues like this and have systems in place to prevent it happening.

Not sure what you have in mind but withdrawal from LISAs entails choosing whether or not the money is to go towards a first property, and HL's LISA FAQs and forms make a clear distinction between the two valid processes, so it isn't really their fault that OP used the wrong one:

How do I use my Lifetime ISA to purchase my first home?

First you’ll need to send us the Lifetime ISA home purchase form 

[...]

How do I withdraw money from a Lifetime ISA if I'm not buying a house?

[...]

The easiest way to make an unlisted withdrawal is to call us on 0117 900 9000. Alternatively, you can download and complete this form.

and the latter form isn't exactly cryptic:

LIFETIME ISA (LISA) CHARGEABLE WITHDRAWAL FORM

Use this form to make a chargeable withdrawal from your Lifetime ISA. If you want to make a withdrawal for an eligible house purchase or because of ill health, you’ll need to fill in a different form.

[...]

Important information:
• Your withdrawal will be subject to a 25% government withdrawal charge [...]

grumiofoundation

If you are 'withdrawing' from a LISA for a house deposit you do not actually withdraw anything. After filling in the correct form your solicitor requests and makes the withdrawal on your behalf and the money is paid directly to them.

(as explained in HL links provided by eskbanker above)

The alternative (link also provided above) withdrawal form literally says in the first line
• Your withdrawal will be subject to a 25% government withdrawal charge so you could get back less than you put in.

grayj132

Thanks for everyones help with this, after exploring this further with HL it became very obvious that I wouldn't be reimbursed for my mistake. Hope no-one has the same experience as myself and definitely an eye-opener to taking my time with forms like these.