Lifetime ISA Interest

HomeBuyer24

I'm buying a flat and I'm in between exchange and completion.  My solicitor has withdrawn the balance from my Lifetime ISA which will be used towards the purchase.  I did originally request them to close the account thus claiming any interest that had accrued since April (interest is generally paid yearly), I don't know how much this will amount to by now but is likely to be in the order or hundreds of pounds.  My provider originally told my solicitor that they couldn't do it by that route and that I'd have to close the account myself.  When I complained they further said that they couldn't close the account at all until after completion in order to report the outcome of the sale to HMRC, and that if I close the account after then that I'd have to pay a penalty (or leave it in there for another 25 years).  I'm annoyed about this as I feel that I'm entitled to use the money towards my deposit which is significantly higher than the money that was ever in the account. The interest on the account is less than both the interest on my mortgage and other savings accounts at the moment.  

Has anyone else faced this issue and is there a work around?   

Emily_Joy

What is your LISA provider? My OH simply withdrawn the interest from BeeHive money and closed the account without asking them anything. The funds then went directly into the deposit.

HomeBuyer24

Funnily enough it's actually Beehive.  I asked them whether if I did that and maybe tried to argue the toss with HMRC later, whether it would just risk a 25% penalty on the interest or whether it would jeopardise all my HMRC bonuses.  They just reiterated that they couldn't close the account until after completion.  I presume you didn't experience any problems. When was your purchase may I ask?

Emily_Joy

HomeBuyer24 said:

 I presume you didn't experience any problems. When was your purchase may I ask?

We completed in the end of September, land registration went through a couple of weeks ago. I think we used LISA for the "final" deposit - i.e. our solicitor asked for 10% deposit prior to exchange and this came from other savings and then we used LISA for a part of the remaining deposit. No, we didn't experience any problems. There were two emails from BeeHive - 1st congratulating us on the purchase and 2nd advising that we can keep LISA open.  I believe we instructed the solicitor to close the account. When we realised the account is open with "trailing" interest still there we asked the solicitor for advise and if my memory serves me well they said close the account manually. 

Albermarle

ISAs & tax-free savings — MoneySavingExpert Forum

Maybe a good idea to also post your query in this forum, as there are some ISA/LISA experts there.

se2020

You don't close the LISA account before completion as, if the sale falls through, the money goes back into it with no penalty.