Lifetime ISAs

David333

Before I turned 40, I opened a Lifetime ISA (LISA) with £1. I have £8000 in a savings account. At some point in the next five years, I want to buy a house. Am I right in thinking that I can only pay £4000 a year into a LISA and the bonus is added that month? So I pay in £4000 today and it'll become £5000 in the next few weeks? Then in the new tax year, I pay in my other £4000, with the result that I'll have £10,000 (plus a bit of interest) available to either buy a house or for retirement with no way to withdraw it without a penalty (although maybe interest helps to lessen the pain of the withdrawal penalty?). Even though the LISA has only had £1 in it for a couple of years, I can use it to buy a house whenever I want, since it's been open for more than a year?

WillPS

You're correct - to add a bit of definition on the bonus timescales, there is a cutoff around the 5th each month, and HMRC will add the bonus corresponding to that cutoff toward the end of each month. 

You can also only contribute until your 50th birthday.

David333

Great, thank you!

cloud_dog

This all assumes you haven't previously owned a property?

David333

cloud_dog said:

This all assumes you haven't previously owned a property?

Yeah, thanks. It would be a first property, which will cost less than whatever the limit is! I've just been reluctant to put the savings in the LISA because then the money is trapped until retirement if I don't buy a house. I know that you can withdraw it, but the penalty seems heavy, although I'm beginning to wonder if any interest earned might cover the penalty. I haven't done the maths though!