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Can you open a second (& contribute to) L-ISA in a tax year?

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So you open a (cash) LISA in the current tax year, pay in to it, use the whole lot for a house purchase, get the keys, job done, cash LISA is now £0.

Can you then open a S&S LISA the next day & contribute in to that?

Or do you have to wait until the next tax year?

Comments

  • masonic
    masonic Posts: 27,138 Forumite
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    edited 17 December 2022 at 7:28PM
    Assuming you paid £4k into the cash LISA before using for the house purchase, then no, as you'd be exceeding the annual LISA allowance. If you contributed less than £4k, then you'd need to either top up the existing cash LISA and transfer it to the S&S LISA, or transfer the empty LISA in order to avoid subscribing to two ISAs of the same type in one tax year.
  • B0bbyEwing
    B0bbyEwing Posts: 1,557 Forumite
    1,000 Posts Second Anniversary Name Dropper
    masonic said:
    Assuming you paid £4k into the cash LISA before using for the house purchase, then no, as you'd be exceeding the annual LISA allowance. If you contributed less than £4k, then you'd need to either top up the existing cash LISA and transfer it to the S&S LISA, or transfer the empty LISA in order to avoid subscribing to two ISAs of the same type in one tax year.
    Ahh got you. 

    April it is then. Thanks.
  • eskbanker
    eskbanker Posts: 36,944 Forumite
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    So you open a (cash) LISA in the current tax year, pay in to it, use the whole lot for a house purchase...
    If you do this then you're likely to be hit with a 25% penalty on withdrawal, so it's probably not a particularly realistic scenario, but, as above, there will probably be a way to accommodate a reasonable proposition, although it'll almost always be best to plan ahead (by more than a year) when opening a LISA....
  • B0bbyEwing
    B0bbyEwing Posts: 1,557 Forumite
    1,000 Posts Second Anniversary Name Dropper
    eskbanker said:
    So you open a (cash) LISA in the current tax year, pay in to it, use the whole lot for a house purchase...
    If you do this then you're likely to be hit with a 25% penalty on withdrawal, so it's probably not a particularly realistic scenario, but, as above, there will probably be a way to accommodate a reasonable proposition, although it'll almost always be best to plan ahead (by more than a year) when opening a LISA....
    I can confirm that this was done and no hitting of any penalty took place.
  • eskbanker said:
    So you open a (cash) LISA in the current tax year, pay in to it, use the whole lot for a house purchase...
    If you do this then you're likely to be hit with a 25% penalty on withdrawal, so it's probably not a particularly realistic scenario, but, as above, there will probably be a way to accommodate a reasonable proposition, although it'll almost always be best to plan ahead (by more than a year) when opening a LISA....
    I can confirm that this was done and no hitting of any penalty took place.
    Well you must have previously held a LISA prior to the start of the current tax year. If you haven't had a LISA for a full calendar year then there will be a penalty on withdrawal whatever you're using it for.

    I don't know many people opening multiple LISAs mainly as conveyancing fees for processing multiple accounts are going to dwarf any interest gain.
  • B0bbyEwing
    B0bbyEwing Posts: 1,557 Forumite
    1,000 Posts Second Anniversary Name Dropper
    eskbanker said:
    So you open a (cash) LISA in the current tax year, pay in to it, use the whole lot for a house purchase...
    If you do this then you're likely to be hit with a 25% penalty on withdrawal, so it's probably not a particularly realistic scenario, but, as above, there will probably be a way to accommodate a reasonable proposition, although it'll almost always be best to plan ahead (by more than a year) when opening a LISA....
    I can confirm that this was done and no hitting of any penalty took place.
    Well you must have previously held a LISA prior to the start of the current tax year. If you haven't had a LISA for a full calendar year then there will be a penalty on withdrawal whatever you're using it for.

    I don't know many people opening multiple LISAs mainly as conveyancing fees for processing multiple accounts are going to dwarf any interest gain.
    Yes. It was already running with Beehive & then once the current tax year came around, 4k was put in it.

    Fully aware about the full calendar year requirement which is why I didn't ask about it.

    Anyway, it's sorted, masonic covered everything & I gave them thanks.
  • eskbanker
    eskbanker Posts: 36,944 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    eskbanker said:
    So you open a (cash) LISA in the current tax year, pay in to it, use the whole lot for a house purchase...
    If you do this then you're likely to be hit with a 25% penalty on withdrawal, so it's probably not a particularly realistic scenario, but, as above, there will probably be a way to accommodate a reasonable proposition, although it'll almost always be best to plan ahead (by more than a year) when opening a LISA....
    I can confirm that this was done and no hitting of any penalty took place.
    Well you must have previously held a LISA prior to the start of the current tax year. If you haven't had a LISA for a full calendar year then there will be a penalty on withdrawal whatever you're using it for.

    I don't know many people opening multiple LISAs mainly as conveyancing fees for processing multiple accounts are going to dwarf any interest gain.
    Yes. It was already running with Beehive & then once the current tax year came around, 4k was put in it.

    Fully aware about the full calendar year requirement which is why I didn't ask about it.

    Anyway, it's sorted, masonic covered everything & I gave them thanks.
    For the avoidance of doubt, as can be seen in the quotes, my comment was in the context of the original version of the story, i.e. opening a LISA (as opposed to funding one that had been opened in an earlier year) and withdrawing in the same tax year....
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