Frequently asked questions
Opening a Lifetime ISA
I’m 40 - can I open a Lifetime ISA?
You can only open a Lifetime ISA before your 40th birthday. If you already have a Lifetime ISA when you turn 40, you can still add money until you turn 50.
Can I hold cash in a Lifetime ISA?
Yes. There’s no charge to hold cash and no time limit on how long you can hold cash, but you won’t receive any interest.
Can I open and pay into a Lifetime ISA for someone else?
Under HMRC rules, a Lifetime ISA can only be opened and topped up by the account holder.
Can I open the Lifetime ISA if I already have other ISAs?
Yes, you can open and add money to other types of ISAs (Cash ISAs, Stocks and Shares ISAs or Innovative Finance ISAs) alongside your Lifetime ISA. You’ll only be able to save into one Lifetime ISA each tax year.
You can contribute up to £20,000 across all your ISAs in the 2017/18 tax year, with up to £4,000 in your Lifetime ISA. The government bonus doesn’t count towards the £20,000 overall limit or the £4,000 Lifetime ISA limit.
Can I use the Lifetime ISA for my first home and retirement?
Yes, there are two ways you could use the Lifetime ISA to invest for both your first home and retirement.
If you don’t use your whole Lifetime ISA to buy your first home, your Lifetime ISA will stay open. You can keep adding to it until the day before your 50th birthday, then use that money for your retirement.
If you use your whole Lifetime ISA to buy your first home, your Lifetime ISA will be closed. But if you’re still between 18 and 39 you can open a new Lifetime ISA to save for your retirement.
Remember, if you close your Lifetime ISA when you’re over 40, you can’t open a new one.
Can I open a Lifetime ISA in joint names?
You can only open a Lifetime ISA in your name. This is the same with all ISAs. But each adult under 40 can open a Lifetime ISA. So first-time buyers buying together could both use their Lifetime ISA and bonus towards their home.
Can I have a Help to Buy ISA and a Lifetime ISA?
Yes, you can have a Help to Buy ISA and a Lifetime ISA at the same time, if you’re eligible for both. But you’ll only be able to use the bonus from one of the accounts to buy your first home.
When is my Lifetime ISA open?
Your Lifetime ISA is open when you add cash with a debit card, transfer money in, or the date your first Direct Debit is due.
The Lifetime ISA bonus
How and when do I get the government bonus?
We claim the government bonus for you and add it to your Lifetime ISA.
For the 2017/18 tax year, we’ll claim your bonus for you in April 2018 and you’ll see it in your account by 4 May 2018.
From 6 April 2018, we’ll claim your bonus for you as soon as possible each month. You’ll see it in your account four to nine weeks later.
Withdrawing money from a Lifetime ISA
When can I take money from my Lifetime ISA?
You can withdraw your money tax free when you’re ready use it for an eligible house purchase (worth up to £450,000) or after you turn 60. You're also allowed to withdraw your Lifetime ISA money if you are terminally ill.
You can take money out at other times too, but there will usually be a 25% charge from the government. This could mean you get back less than you put in.
The charge doesn’t apply in the 2017/18 tax year, but your account will be closed and you won’t get the government bonus.
What are the rules for using my Lifetime ISA to buy a home?
You’ll need to have had your Lifetime ISA for a full year, and you’ll need to be a first-time buyer.
The house you’re buying has to be in the UK and cost £450,000 or less. This is just the house price and it doesn’t include fixtures and fittings. It also needs to be your main residence. If it’s still being built, it’ll need to be your main residence as soon as it’s ready for you to live in.
You’ll need to be buying the house with a mortgage, regulated home purchase plan or through a shared ownership arrangement. If you’re buying a house with cash, you can still use your Lifetime ISA money. But you’d have to pay the government withdrawal charge, which means you could get back less than you put in.
How do I use my Lifetime ISA to purchase my first home?
First you’ll need to contact your conveyancer. They’ll ask you to complete a declaration and will let us know when everything’s ready. We’ll pay the amount requested directly to the conveyancer. If your purchase doesn’t complete within 90 days of the withdrawal, the amount withdrawn will be returned to your Lifetime ISA.
In order to use the Lifetime ISA bonus when purchasing your first home (and not have to pay a government withdrawal charge) you’ll need to have had your Lifetime ISA open for at least 12 months.
Who qualifies as a first-time buyer?
You’re a first-time buyer if you don’t own, and have never owned, a residential property anywhere in the world, either by yourself or together with someone else. This includes any property that you inherited or that was given to you.
Transferring to a Lifetime ISA
Can I transfer a Help to Buy ISA to a Lifetime ISA?
You can transfer all types of ISA to a Lifetime ISA. If you transfer a Help to Buy ISA to a Lifetime ISA it could mean you get a bigger government bonus and also enjoy greater flexibility when saving for your first home.
Can I transfer other existing ISAs to a Lifetime ISA?
Yes, you can transfer other existing ISAs to a Lifetime ISA and benefit from the 25% government bonus.
How do transfers between ISAs affect the overall ISA allowance?
If you transfer from an ISA to a Lifetime ISA, your transfer won’t count towards your overall ISA allowance (£20,000 for the 2017/18 tax year). But it will count towards your Lifetime ISA allowance (£4,000 for the 2017/18 tax year).
Different rules apply when transferring a Help to Buy ISA in 2017/18.