Lifetime ISA bonus

Your bonus payment has been received from HMRC and added to your Lifetime ISA. This is for savings made into your account in the 2017/18 tax year.

How has your bonus been calculated and how will future bonus payments be made?

Frequently asked questions

If you're using the money held in your Lifetime ISA to buy your first home, you can withdraw your bonus and other Lifetime ISA contributions after 12 months from opening the account.

You can withdraw money from your Lifetime ISA for another purpose at any time, but if you withdraw before the age of 60 a 25% government withdrawal charge will apply to the amount withdrawn which means you would get back less than you paid in.

From the start of the new tax year (6 April 2018), HMRC will calculate bonus payments for your Lifetime ISA on a month-by-month basis.

Your bonus is calculated on any payments you make into your account from the 6th of the month to the 5th of the following month inclusive (to qualify for a bonus payment you will need to have contributed between £1 and £4,000 into your Lifetime ISA account during this time). Your bonus will be paid into your account within 14 days of the 20th day of month two.

Example: Any payments you’ve made into your Lifetime ISA between 6 April 2018 and 5 May 2018 will be paid into your account within 14 days of 20 May 2018 (by 4 June).

Check when you’ve made payments into your account - HMRC are only sending bonus payments to us by 4 May 2018 for any payments you’ve made into your account during the 2017/2018 tax year (up to 5 April 2018).

For any payments you’ve made into your Lifetime ISA since 6 April 2018, your bonus will be paid into your account within 14 days of 20 May 2018 (by 4 June).

Withdrawing money from your Lifetime ISA for any reason other than to help buy your first home or after you’ve reached the age of 60 will normally incur a 25% government withdrawal charge. This means you would get back less than you paid in.

The 25% government withdrawal charge doesn’t apply if you are terminally ill or upon death.

Withdrawn funds cannot be replaced without affecting your Lifetime ISA allowance.

If you close your Lifetime ISA after you reach age 40 you won’t be able to open a new one so you may wish to leave a small amount in the account so you can continue to save in it in future. You can continue to pay into your Lifetime ISA up to the day before your 50th birthday and will gain a bonus of £10,000 if you pay in your full allowance each year between the ages of 40 and 50.

The 25% government charge is applied to the amount you withdraw. As well as recovering the 25% government bonus, you'll also lose some of your own savings and will receive back less than you invested. This is demonstrated in the example below, which is based on you contributing the full £4,000 allowance at account opening:

Your actions Year 1 Year 2
You open the account with £4,000
The government bonus is added £1,000
Total for 1st year £5,000
You withdraw early £5,000
The government charge is 25% -£1,250
You receive back £3,750
You lose this much money -£250

When you come to buy, you’ll need to tell your conveyancer you want to use part or all of your Skipton Online Cash Lifetime ISA towards the purchase and provide them with a declaration.

Your conveyancer also has to provide us with a declaration. It’s your responsibility to ensure this is provided, but your conveyancer should do this as part of the buying process.

Once we receive the appropriate paperwork from your conveyancer we’ll get in touch with you to confirm the instruction and then pay the amount requested to the conveyancer within 30 days without applying the government withdrawal charge.

You can instruct your conveyancer to use your Lifetime ISA to buy your first home from 12 months after opening it. If you’ve transferred a Lifetime ISA to us, this period starts from the date you originally opened your Lifetime ISA. The following criteria apply:

  • You have held your Lifetime ISA for at least 12 months before instructing your conveyancer to use the money in it.
  • If both you, and the person you are buying your home with, are first time buyers you can both use your Lifetime ISA to put towards the purchase of your home without paying a withdrawal charge.

If you are a first time buyer, but the person you are buying your home with has owned a property before then they will not be able to use their Lifetime ISA (if they’ve opened a Lifetime ISA too) towards the purchase of your home without paying a withdrawal charge. However you, as a first time buyer, would still be able to use your own Lifetime ISA towards the price of the home that you are buying together.

In both cases the price of the home you’re buying together must not exceed £450,000 if you wish to use your Lifetime ISA towards it without paying a withdrawal charge.

  • The property must be purchased in the UK with a mortgage, but not a buy to let mortgage unless you, or your spouse or civil partner, are a UK Crown employee serving overseas and intend to use the property as your main residence in the future.
  • You must occupy the property as your main residence immediately on completion, or if you or your spouse/civil partner are a UK Crown employee serving overseas, you must intend to in the future.



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