Lifetime ISA bonus eligibility

longshot16

Hi
If you use your bonus to buy a house, can you then later open another LISA to use for retirement (and get a bonus again)?

AmityNeon

If you choose to withdraw from your LISA to purchase an eligible property, there will be no withdrawal penalty. You choose how much you wish to withdraw (via your solicitor). This withdrawal does not close the LISA; you can continue contributing to your LISA and earn the 25% government bonus on contributions each year until you turn 50.

longshot16

Thanks @AmityNeon - so what you are sahying is that you get the 25% binus twce? It isnt an either/or scenario? 

amanda1024

longshot16 said:

Thanks @AmityNeon - so what you are sahying is that you get the 25% binus twce? It isnt an either/or scenario? 

You get the 25% bonus on everything you add, but just once on each £ you contribute, not twice for the same £s. Doesn’t matter whether you’re intending to withdraw to buy a house, after you turn 60, or even if you might take the hit on withdrawing early - the bonus is paid on the money when it goes in rather than when it comes out.

AmityNeon

longshot16 said:

Thanks @AmityNeon - so what you are sahying is that you get the 25% binus twce? It isnt an either/or scenario?

The 25% bonus is earned per contribution (i.e. for each deposit into your LISA). It can take up to 10 weeks, but the bonus is usually credited by the end of the month following the qualifying deposit. For example, if you contribute £4,000 in February, you should receive £1,000 in March; if you contribute £333.33 every month, you should receive £83.34 every month.

Even if you instruct your solicitor to withdraw the entire LISA balance to complete your property purchase, you can continue contributing to your LISA. As there is a delay in bonuses being credited, it's entirely possible for a bonus to be credited after your property purchase has completed, i.e. the full LISA balance was withdrawn between the date of a contribution and the date of its corresponding bonus being credited.

Oasis1

Ah now the penalty charge is making sense because if you withdrew the money but not for a house or a pension, then started adding it back in, you would earn that 25% bonus twice on the same money! Right?

Albermarle

Oasis1 said:

Ah now the penalty charge is making sense because if you withdrew the money but not for a house or a pension, then started adding it back in, you would earn that 25% bonus twice on the same money! Right?

However if you withdraw money but not for a house or pension, you would lose the 25 % bonus you had already got ( and a bit more )

400ixl

Oasis1 said:

Ah now the penalty charge is making sense because if you withdrew the money but not for a house or a pension, then started adding it back in, you would earn that 25% bonus twice on the same money! Right?

Yes, but the withdrawal penalty charge will cost more than the first bonus so you will be starting from a negative figure, so the end result will be less than only putting it in once.

Thus there is no incentive to do this and hence the penalty.

Ideally it would be a case of making it neutral to remove the money for other purposes as life does just happen sometimes, or the house you want to buy is above the limits.