Stocks and Shares Lifetime ISA Withdrawal

EverydaySaver7

I have a stocks and shares lifetime ISA and have made roughly 20% on the money I have invested over the last 4 years and the government bonus. If I was to withdraw my money from this ISA not for the purpose of buying a house for the first time, what are the penalty charges that I would face? I see a lot of information about penalties of withdrawing from Cash Lifetime ISAs but less sure with a stocks and shares LISA, will I lose the 20% increase in value too? Any information on this topic would be useful, thank you  

NoMore

You would be charged 25% of the amount you withdraw. Which in reality is a 6.25% loss compared to if you had deposited the same in an isa and had the same gain without the LISA bonus.

EverydaySaver7

Is that 25% rate a flat rate for any gains (ie if I went up to 30% increase)? How is is calculated?

EverydaySaver7

For example:
I put in 400
gov bonus added 100
My 500 through stocks and shares increase by 20% = 600
I make a chargeable withdrawal of that 600
25% of 600 = 150
So i get 450 out (ie 50 more than the 400 I put in)

This correct?

eskbanker

EverydaySaver7 said:

For example:
I put in 400
gov bonus added 100
My 500 through stocks and shares increase by 20% = 600
I make a chargeable withdrawal of that 600
25% of 600 = 150
So i get 450 out (ie 50 more than the 400 I put in)

This correct?

Yes.

The point being made was that if you'd put the £400 in a non-Lifetime S&S ISA (with the same investments), it would have grown to £480, all of which you could access, so using a LISA instead loses you 6.25% (£450 v £480) when compared with a product that doesn't penalise for premature withdrawals.

adwils

Following on from this, If I WD (and pay the penalty), can I then pay it into a SIPP and get the 25% tax allowance?.

Would this be counted as deprivation of capital for calculation of benefits?.

eskbanker

adwils said:

Following on from this, If I WD (and pay the penalty), can I then pay it into a SIPP and get the 25% tax allowance?.

Would this be counted as deprivation of capital for calculation of benefits?.

Are you the OP under a different name, as it can get confusing if scenarios from different posters are mingled in the same thread?