Confused about timing / end of year LISA
in ISAs & tax-free savings
2 replies 63 views
I opened up a Moneybox account to open a LISA on 22/02/2022.
I have deposited £4000, to try and max out the bonus granted by UK government for first time buying a property.
However, I am a little confused about the "end of tax year" and consequently left wondering If I should of waited until now to deposit the money, as it is now locked away for at least 10 - 11 more months.
1. Does my current £4000 continue to get the 25% until the full 12 months are up from the time I opened (22/02/2023).
2. Can I put an additional £4000 in to get essentially 25% on £8000 for 10 months.
3. Will I receive nothing on the initial £4000 and have to put in another £4000 to get the 25% bonus, and this will only account for the second amount (i.e. £1000)
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1. Yes, you should have the one off 25% applied to the account 1 month after you deposited the money. The monthly interest rate then continues to increase on top of that.
2. Yes, after the 6th April 2022 a new ISA year started so you can add another £4k and you would get another 25% (of that £4k) added one month after that deposit and then continue to get the interest rate on top of the full amount.
3. No, each deposit up to £4k in each year gets 25% applied one month after that deposit was made.
The 12 months minimum period to take out the money (for a FTB mortgage) and keep the 25% starts from the date of the first deposit, it does not get reset by additional deposits.
The end of tax year is the date at which the amount you can deposit (the up to £4k resets), it has nothing to do with the minimum period of 1 year for withdrawal.
The other end of the extreme is you could have put your first £4k in on the 7th April 2021 and that would have got the extra 25% in May 2021, you could then add another £4k on the 7th April 2022 and got the extra 25% in May 2022 and withdrawn it all at that point (13 months from the first investment) to use for a mortgage.
Sure someone will correct me if I have that wrong.
If you pay in £4000 now you will get another 25% bonus - so will have £10,000 in the account including bonuses.