Lifetime Isas

hattiejordan

My son is buying a house.  Unfortunately his Lifetime Isa won't be a year old at that time.  He knows he will pay 25% penalty.  Is he allowed to keep the Lisa until after the 1 year anniversary so that he gets the bonus before he pays the 25% penalty? I believe this means a net fee of 6.25%.  Otherwise he will be paying 25% of what he's put in with no bonus.  I don't think he'll be able to drag completion out until July when his LISA reaches the year.

eskbanker

If he opened his LISA in July 2024 as suggested, then the bonus should have been added to the account already, in August or September, assuming he funded it on opening.  Bonuses are added within 4-8 weeks of each contribution, not at the end of the year....

Alexland

He could perhaps do a partial withdrawal of most of the money such that the penalty on the withdrawal amount matched the bonus earned on the whole contribution.

Then for what's left in the LISA he could invest via a S&S LISA to withdraw from age 60 without penalty.

He may even want to add more in future to earn additional bonus for age 60 although this may depend on if he has access to better pension options.

hattiejordan

Thank you both, that's very helpful.