Third Party Lifetime ISA payments

CharlieBee1690

Hello, my niece has just turned 18 and will soon be starting uni, so saving for the future is probably at the bottom of her to do list. Having struggled to get my own house deposit together I am keen for her to open a Lifetime ISA asap & I would like to make a regular monthly payment into this - I fully realise that she can of course make withdrawals whenever she likes (& incur the penalty!) and completely accept that risk as she's mostly quite sensible but in order to add an extra barrier from temptation I'd prefer to set up the regular payment (?direct debit) - is this straight forward which such an account or is there anything I need to know before I ask her to open a LISA account?

eskbanker

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#cash-subscriptions confirms that the overall ISA rules allow for third party contributions, although this text follows the unhelpfully-worded "Investors [...] must subscribe with their own cash":

Cash subscriptions from third parties can be accepted without question unless the ISA manager holds information that shows that the cash does not belong to the investor.

However, you'd need to check the terms of any individual provider/account to validate that the specific one you have in mind can be operated in the way you (and she) are happy with, e.g. some may only accept payments from one nominated account.

dunstonh

There is also the issue with third party payments that the payer needs to have anti-money laundering checks carried out them.   The budget providers may not be willing to do that extra work because of the costs of putting in processes for so few cases.  So, they may refuse to offer third party payments.

A standing order from you to the niece's current account before the direct debit is due to paid from her account is by far the easiest solution.

Alexland

Also consider if with likely house price inflation the £450k property price limit might be too restrictive by the time she gets into position to buy a property perhaps with a friend or partner to combine spending power. It would be a shame to pay the early withdrawal charge in 5-7 years time.