LISA

Beardeddragon

Hello,

Looking for some advice in terms of depositing money into a LISA.

I recently opened a LISA with money box in the hope of transferring my balance over from my Help to Buy ISA but the deadline for this tax year has now passed, however they are still accepting cash deposits.

I was wondering if I could withdraw £4000 from my HTB ISA into my current account and then making a £4000 cash deposit into the LISA to claim the government bonus for this tax year? Would this be breaking any type of rules or incur any such penalties? Alternatively I could take out a loan for the cash deposit and then pay it off immediately with the money from the HTB. The LISA states the £4000 can be deposited all at once but just wanted to check if anyone would have any similar experiences or advice.

Thanks in advance.

eskbanker

If you still have at least £4K headroom from your 2025/26 £20K ISA contribution allowance then yes, you can withdraw that from HTB and pay into LISA as new money rather than transferring - there are unlikely to be any penalties for doing so, as HTB ISAs are generally (exclusively?) easy access products…

Beardeddragon

Thank you, I came to the same conclusion based off what I could read, there doesn't seem to be any rules against it. My HTB is an easy access product but I thought it seemed a bit of a loophole to withdraw and then deposit into the new LISA as cash rather than a transfer but I guess processing times may be different for Cash deposits Vs ISA transfers?

https://forums.moneysavingexpert.com/discussion/comment/81921838#Comment_81921838

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81925041#Comment_81925041

It's not a loophole - it's possible to withdraw money from any ISA and redeposit it into another as an alternative to transferring, but the disadvantage of doing this is that (except for flexible ISAs) it's then treated as current year money that uses up some or all of your £20K annual allowance, which is an issue for those who are in the fortunate position of making more use of this.