Lifetime / Cash ISA Mistake

Spark55

I have created a bit of a problem for myself and I am looking for some advice on how to resolve it...

Back in April when the new tax year started I transferred £20k from my regular savings account into my Trading 2-1-2 Cash ISA (flexible). At the time the plan was to keep another £4k in a regular savings account at a higher interest rate and then transfer it into my Tembo LISA in March 2026 just before the end of the tax year. I had forgotten that the £4k LISA limit wasn't on top of the £20k ISA limit. 

That brings me to today when I have realised my mistake. I have £4k sat in my regular savings with no way to transfer it into my LISA without going over my ISA allowance for this year which I have already used up. This means I am currently unable to claim the £1k government LISA bonus for this year.

I also made contributions to the T-212 ISA in 24/25 so should be able to make a partial transfer from my previous years contributions. However, Tembo don't support ISA to LISA transfers so I cannot do a partial transfer of the 4k from T-212 to Tembo. I looked at transferring all of Tembo to Moneybox LISA who do support partial ISA to LISA transfers, but I previously held my LISA with them and they will not allow me to go back. I could withdraw £4k from T-212 but I think that means I would only be able to pay it back into the same account and not my LISA?

I am curious if anyone has ever been in this situation before and how did you manage to transfer the money across whilst keeping it within the ISA "wrapper"? Are there any other LISA providers that allow partial transfers from an ISA? I really don't want to miss out on this year's £1k bonus.

Ch1ll1Phlakes

Simplest work around. Open a new Lifetime ISA and do the partial transfer to it. You can then transfer this LISA into the Tembo LISA at a later stage.

I would suggest Skipton Cash Lifetime ISA, as they allow transfers from Cash ISAs and they allow partial transfers from other providers. I've attached screenshots (sorry they are so big but I don't know how to resize them - if it's possible). You may want to check this will definitely work and that they can receive transfers from T212