Using a LISA within the 1 year limit

SuffolkFarmer
SuffolkFarmer Posts: 1 Newbie
in ISAs & tax-free savings
My son had a HTB ISA for 2 years and in January 2018 transferred this into a LISA. Now of course he has found the perfect fist time property to buy but in all likelihood completion would be before the 1st anniversary date of the LISA in January 2019. Does anyone know whether the start date of the original HTB ISA has any relevance here or whether in the even that he takes the LISA money early will he be penalised on the whole LISA value or only the contributions from the start of the LISA and not the HTB ISA transfer value?

(or any good ideas for getting a completion date 4 months after exchange)

Thanks for the help.

Comments

  • Zorillo
    Zorillo Posts: 774 Forumite
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    edited 19 August 2018 at 8:13PM
    Edit: Alex's answer is better than mine.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    He will suffer the LISA withdrawal penalty but still be able to claim the HTB ISA bonus (if applicable) based on the transfered value within 12 months of the HTB ISA closure.

    Alex
  • MoneySavingExpert12345
    MoneySavingExpert12345 Posts: 14 Forumite
    Does anybody how far in advance of the 1 year limit you can start putting in offers for houses? (Very roughly speaking given timelines for the process and applying for Lifetime ISA withdrawal etc.)
  • Ed-1
    Ed-1 Posts: 3,890 Forumite
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    Alexland wrote: »
    He will suffer the LISA withdrawal penalty but still be able to claim the HTB ISA bonus (if applicable) based on the transfered value within 12 months of the HTB ISA closure.

    Alex

    Can a H2B ISA that has been transferred to a LISA be used in isolation (i.e. without withdrawing from a LISA)? As the transferred H2B ISA funds received a bonus into the LISA so surely getting a bonus on the H2B ISA closing balance breks the "only one bonus between the two" rule.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    Ed-1 wrote: »
    Can a H2B ISA that has been transferred to a LISA be used in isolation (i.e. without withdrawing from a LISA)? As the transferred H2B ISA funds received a bonus into the LISA so surely getting a bonus on the H2B ISA closing balance breks the "only one bonus between the two" rule.

    Yes the HTB ISA bonus is claimed by the solicitor separately from the HTB ISA withdrawal which is done by the customer. There is nothing stopping someone claiming the HTB ISA bonus for their property purchase and keeping the LISA (including the transferred HTB money and associated bonus) until age 60. You may even be able to 'triple dip' by then recycling into a pension between 60 and 75. See below thread:

    https://forums.moneysavingexpert.com/showthread.php?t=5876051

    Alex
  • Alexland
    Alexland Posts: 9,653 Forumite
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    MoneySavingExpert12345 wrote: »
    Does anybody how far in advance of the 1 year limit you can start putting in offers for houses? (Very roughly speaking given timelines for the process and applying for Lifetime ISA withdrawal etc.)

    Will reply in your other thread
    https://forums.moneysavingexpert.com/showthread.php?p=74679765
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