Lifetime ISA Frequently Asked Questions

We've brought together some of the most frequently asked questions about the Skipton Online Cash Lifetime ISA to help you quickly find the answer you need.


Your Lifetime ISA

From paying in and receiving your bonus to withdrawing funds if you need to, here are the basics about the Lifetime ISA.

You can only have one Lifetime ISA in each tax year, and you can pay in a maximum of £4,000 each tax year up to and including the day before your 50th birthday. During the same tax year you can also have one Cash ISA, one Stocks & Shares ISA and an Innovative Finance (peer-to-peer) ISA. The combined total of your ISA savings must not exceed the annual ISA allowance (£20,000 in 2018/2019.) 

For example, if you save the maximum of £4,000 into a Lifetime ISA, you would still have £16,000 left of your ISA allowance.

You can cancel your Lifetime ISA within 30 days of opening it without incurring a government withdrawal charge. If you opened a Cash Lifetime ISA you will get back the full amount you have paid in. If you opened a Stocks & Shares Lifetime ISA, you may get back less than you paid in due to market movements.

To cancel your Skipton Online Cash Lifetime ISA within the first 30 days of opening the account, log into Skipton Online and send us a secure message confirming you’d like to close your Lifetime ISA and include the bank details of where you’d like the withdrawn funds to be sent. We will then call you within 48 hours to confirm this. However, due to our online security measures, we can’t return your money until after 14 days after opening your account.

All ISA transfers between ISA providers into Lifetime ISAs are sent by cheque in the post, therefore it can take up to 30 days to complete.

Where we hold your mobile number, we’ll notify you by text once your transfer is complete. If we don’t hold your mobile number you will receive a confirmation email once your transfer has completed.

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.

Please see the section - How does the withdrawal charge affect my savings?

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Withdrawn funds cannot be replaced without affecting your Lifetime ISA allowance.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

Some ISAs are flexible, which means you can withdraw and pay back in throughout the tax year without affecting your overall annual ISA allowance. However, Lifetime ISAs are not flexible, so it will not be possible for withdrawals to be made and replaced without affecting your annual Lifetime ISA allowance or your overall ISA allowance.

Yes, but you can only pay into one Lifetime ISA in each tax year and the maximum amount you can pay in each year is your £4,000 Lifetime ISA allowance. For each Lifetime ISA you open, you will need to wait 12 months before being able to instruct your conveyancer when buying your first home.

HMRC will calculate your Lifetime ISA bonus payment for the 2017/18 financial year based on your contributions up to midnight on 5 April 2018. Your bonus will be 25% of the amount you have paid in up to the £4,000 annual Lifetime ISA allowance, plus any Help to Buy ISA funds transferred in that qualify for the bonus.

The government bonus will be added to your account on or by 4 May 2018.

From the start of the new tax year on 6 April 2018, HMRC will calculate bonus payments for your Lifetime ISA account 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. Your bonus will be paid into your account within 14 days of the 20th of month two.

We will email you to let you know once your bonus has been paid into your account. The day we receive payment from HMRC, we pay it directly into your account, so you don’t lose any interest.

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.

This example doesn't include any interest earned.

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


Transferring another ISA into a Skipton Online Cash Lifetime ISA

If you already have ISAs and want to boost your Lifetime ISA by transferring money into it, find out what that could mean for your savings.

  Lifetime ISA Help to Buy ISA
How much can you save per year? £4,000 £2,400 (£3,400 in year one)
Payment restrictions? None £200 per month
Maximum bonus? £32,000 (over 32 years) assuming a maximum contribution £3,000
Bonus paid? Monthly. When you buy a home
Maximum property price? £450,000 £250,000 (£450,000 in London)
Minimum period to hold account? Lifetime ISA has to be open 12 months before a first house purchase withdrawal can be made At least £1,600 saved
Who can open it? Anyone aged 18 to 39 First-time buyer aged 16+
When is money paid out? Funds available for exchange of contracts Funds available upon completion

Yes, if you transferred your Help to Buy balance as at 5 April 2017 to us before 5 April 2018, you will get the 25% bonus on all your contributions. Any Help to Buy ISA contributions made after 5 April 2017 or transferred to us after 5 April 2018 will get the 25% bonus (but will count towards your Lifetime ISA allowance).

Yes you can pay into both, however you can only use the bonus from either a Lifetime ISA or a Help to Buy ISA – and not from both – to buy your first home. You can use your Lifetime ISA to buy your first home 12 months after opening it.

The table below summarises how you can transfer funds into a Lifetime ISA:

Transfer into Lifetime ISA from: Details
Cash ISA, Stocks and Shares ISA or Innovative Finance ISA Transferring funds from a previous year’s ISA counts towards your £4,000 Lifetime ISA allowance but not your £20,000 annual ISA allowance. Money transferred from a current year’s ISA to a Lifetime ISA will be treated as part of your £20,000 ISA allowance.
Help to Buy ISA Any transfers will all count as part of the £4,000 annual Lifetime ISA allowance.
Another Lifetime ISA (Cash) Yes, there is no government charge to do this and your annual Lifetime ISA allowance is not affected.
Another Lifetime ISA (Stocks & Shares) Yes, there is no government charge to do this and your annual Lifetime ISA allowance is not affected.

Please note: if you've transferred a Lifetime ISA to us, the 12 month period before you can make a charge free withdrawal for your first house purchase starts from the date you originally opened your Lifetime ISA.

If you transfer out of your Lifetime ISA into a different type of ISA (Cash ISA, Stocks & Shares ISA or an Innovative Finance ISA) the transfer will be subject to the 25% government withdrawal charge. This means you’ll get back less than you paid in.

You can transfer your Lifetime ISA into another Lifetime ISA without incurring the government withdrawal charge.

Where we hold your mobile number, we’ll notify you by text once we receive your ISA Transfer Authority Form and we’ll keep you updated with the progress of your transfer until this is complete. If we don’t hold your mobile number you will receive an email once your transfer has completed.


I'd like to use my Lifetime ISA to purchase my first home

Owning your own home is an exciting prospect and a Lifetime ISA could help you achieve your dream.

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.

Yes, and there’s no minimum withdrawal amount. For example, you may have more than one Lifetime ISA and you may need to phase your withdrawals during your house purchase.

Remember you must have held each Lifetime ISA for at least 12 months before instructing your conveyancer to use the money in it to buy your first home. All withdrawals must be made before your house purchase completes to qualify as a charge free withdrawal.

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’t open a Lifetime ISA on someone else’s behalf, but if your child or grandchild has a Lifetime ISA you can gift money for them to pay into it. If you gifted £3,000 the government bonus would be £750. You can make gifts of up to £3,000 in total each tax year without them being added to the value of your estate for Inheritance Tax purposes. If you are considering making gifts, it is recommended that you take financial advice if the value of your estate exceeds £325,000.

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.


I'd like to use my Skipton Online Cash Lifetime ISA to fund my retirement 

You can use your Lifetime ISA to help you save towards your retirement, although it might not be right for everyone.

If you decide to use your Skipton Online Cash Lifetime ISA to save towards retirement, you should consider:

  • when you intend to retire
  • what other provision for retirement you are making (for example contributions to a pension); and
  • whether a Cash Lifetime ISA will meet your savings goals. For example, will it provide you with sufficient income in retirement?

As your circumstances can change over time you should regularly review whether the type of Lifetime ISA you hold is still right for you.

A Cash Lifetime ISA may not be the best option for retirement savings. It’s generally accepted that saving for retirement is a long term commitment and it could be better to invest in Stocks and Shares. However, this will depend on your personal circumstances, including your attitude to risk.

You could invest in a pension or stocks and shares Lifetime ISA. While the value of your investment is at risk and can fall as well as rise, it may be possible to receive a better return from a stocks and shares based product over the long term (more than 10 years) than you would from a savings account.

If you are employed, you should consider the potential availability of a workplace pension scheme and your tax position. If you save in a Lifetime ISA instead of enrolling in, or contributing to, a pension scheme from your employer or personal pension scheme:

  • you may lose the benefit of any employer contributions to that scheme; and
  • your current or future entitlement to means-tested benefits may be affected (these depend on the amount of income and capital you have, which includes savings).

Please be aware that the information we have provided is not advice. If you’re considering changing your existing pension arrangements as part of a decision to invest in a Lifetime ISA, you should seek professional financial advice before making any decision. If you don’t fully understand the pension and tax rules when making changes, you may not optimise your retirement savings and may face an income shortfall in retirement.



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