Lifetime ISA Frequently Asked Questions

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. Your bonus will be paid into your account within 14 days of the 20th of month two.

The day we receive payment from HMRC, we pay it directly into your account, so you don’t lose any interest.

The 25% government withdrawal charge is only applied to the amount you withdraw. Where the 25% withdrawal charge applies, as well as returning the 25% government bonus, you'll also lose some of your own savings and will receive back less than you deposited in the account. The charges are demonstrated in the example below (this doesn't include any interest earned).

Yes, but you can only pay into one Lifetime ISA in each tax year and the maximum amount you can pay in each tax year is £4,000 up to and including the day before your 50th birthday.

If you want to withdraw from multiple Lifetime ISAs at the same time to buy your first home, you will need to wait 12 months from the date of your first payment into each account before being able to instruct your conveyancer. If you don't wait 12 months the 25% government withdrawal charge will apply to any withdrawals from that Lifetime ISA.

During the same tax year, you can have one Lifetime ISA, 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 this tax year.)

For example, if you save the maximum (£4,000 this tax year) into a Lifetime ISA, you’d still have £16,000 left of your ISA allowance.

If you make a payment that exceeds your annual Lifetime ISA allowance (£4,000 for this tax year), we'll return the whole payment. You can make another payment, as long as it doesn't take you over your annual allowance.

You can transfer your Lifetime ISA into another Lifetime ISA without incurring the government withdrawal charge. However, if you transfer 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 use your Lifetime ISA to buy your first home 12 months after your first payment into the account without paying the 25% government withdrawal charge. If you’ve transferred from another provider, the 12 months starts from the date you paid into the original Lifetime ISA.

If you’re using your Lifetime ISA to save for retirement, you can withdraw for any reason without having to pay the 25% government withdrawal charge once you turn 60.

It's important to consider whether you might want to leave your Cash Lifetime ISA open so that you can continue to enjoy the government bonus and tax benefits of saving towards your first home or retirement. Once you reach 40 years of age you're no longer eligible to open a new Lifetime ISA, but you can continue to contribute to an existing one until the age of 50. If you wish to leave your Lifetime ISA open you will need to leave at least £1 in your account.

You can cancel your Lifetime ISA within 30 days of opening it without incurring a government withdrawal charge. You’ll get back the full amount you’ve paid in and you can still open another Lifetime ISA within the same tax year (if eligible). See “How do I withdraw funds from my Lifetime ISA?” below for more information on cancelling or closing a Skipton Online Cash Lifetime ISA.

There are different rules that apply depending on when your account was opened and the reason for your withdrawal.

Please see our Lifetime ISA withdrawal charges page.

If your account is closed, it’ll be reinstated and the bonus paid in. We’d record a break in membership with the Society on the system if you don’t have any other accounts with us. We’d then contact you to confirm we’ve received the bonus and ask you what you’d like to do with the amount received.

If the bonus has been received after your house purchase has completed you would have to pay the 25% government withdrawal charge if you choose to withdraw it before the age of 60.

^The Help to Buy ISA is now closed to new applications, but if you have already opened one you can continue saving into it until November 2029.

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 your first payment in. If you withdraw before that you will incur a 25% government withdrawal charge and you'd get back less than you paid in.

No, you can only receive the government bonus on either a Help to Buy ISA or a Lifetime ISA. You cannot claim the bonus for both accounts. You can transfer your Help to Buy ISA into a Lifetime ISA (these funds will count towards your Lifetime ISA allowance) and these will be eligible for the government bonus.

Remember, if you transfer funds from other types of ISA into your Lifetime ISA, the start date of your account is the day you first paid into your Lifetime ISA, not the date you opened your previous 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 and this means you’ll get back less than you paid in.

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

• when you plan to retire
• what other savings 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 enough 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. Whilst 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 longer term (5 years plus) than you would from a savings account.

If you are employed, you should consider the potential availability of a workplace pension scheme through an employer which provides employer matched contributions, and your tax position. If you save in a Lifetime ISA instead of joining, or paying into, a pension scheme from your employer or personal pension scheme:

• you may lose the benefit of contributions by an employer (if any) 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 varying your existing pension arrangements as part of a decision to invest in a Lifetime ISA, you should seek independent financial advice before making any changes. 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.

It's important you only save money you don't need immediate access to (it's usually a good idea to have an emergency fund of 3-6 months income for unexpected bills) in order to avoid incurring the government withdrawal charge. This will be charged at 25%. Where the 25% government withdrawal charge applies, as well as returning the 25% government bonus, you'll also lose some of your own savings and will receive back less than you paid in. Find out more about the Lifetime ISA government withdrawal charge. This is demonstrated in the example below.

This example doesn't include any interest earned.

This table is designed to help you understand what the value of a Lifetime ISA might be at age 60, depending on the age at which saving starts and assuming the maximum annual subscription at the beginning of each tax year up to age 50 and receipt of the Lifetime ISA government bonus. It may not be relevant if you are saving in a Lifetime ISA for house purchase.

The estimated figures in columns 4 and 5 are based on standardised rates of return, which may not reflect actual or expected returns for your choice of investment for a Lifetime ISA, and include the effect of inflation. They are not based on the rate of interest offered.

Column 6 shows how inflation (assumed at 2.5%) and charges could affect the returns from a Lifetime ISA. As the Skipton Cash Lifetime ISA has no management charges, these have not been included; it’s worth bearing in mind that charges will normally apply for stocks and shares Lifetime ISAs.

You can use the figures in column 6 to compare the returns from a Lifetime ISA without management charges offering a 5% return to other Lifetime ISAs or long term savings products. This is not representative of the return currently offered by the Skipton Cash Lifetime ISA which is less than the 5% used in the illustration. If you use our Cash Lifetime ISA to save for your retirement the estimated outcome at age 60 could be significantly less than the figures provided in column 5.

The money from the Lifetime ISA can only be used for your deposit and the property must be purchased with a mortgage (not a Buy to Let mortgage). The property must be in the UK and for you to live in as your main residence immediately on completion, and have a purchase price of £450,000 or less. Withdrawals that don't satisfy these conditions will be subject to a government withdrawal charge of 25% of the amount withdrawn.

Yes. If you are both first-time buyers and each held a Lifetime ISA for at least 12 months you can both use your Lifetime ISA to put towards the purchase of your home, without paying the 25% government withdrawal charge.

If the person you’re buying with has owned a property before, they wouldn’t be able to use their Lifetime ISA without incurring the government 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.

If you’re using the Shared Ownership scheme to buy your first home, it can be used towards the deposit when you buy your initial share, but it can’t be used again without paying the 25% government withdrawal charge to buy any further shares.

You’ll be unable to use it without paying the government withdrawal charge if you already own a property. If you’re unsure whether you already legally own the property or need any clarification, you should seek some independent advice.

You can give our Conveyancer Declaration (PDF) to your conveyancer along with your completed Investor Declaration Form (PDF). Alternatively, they can find both of these forms on our solicitors' page as well as more information about our Lifetime ISA first time buyer withdrawal process.

Your conveyancer should send us these at least 30 days before your completion date. We require the completion date so we can process the request and prioritise the withdrawal for a first house purchase request. If we don’t have this, we’ll release the funds to your conveyancer 30 days after we receive the request. If your form has been sent without a completion date, and your completion date is now set for less than 30 days after we received your form, you or your conveyancer should contact us as soon as possible.

If we have received a completion date on your declaration form, we aim to release the money within 48 hours before your completion date. If we do not have this, we will release the funds to your conveyancer 30 days after we receive the request.

If your form has been sent without a completion date, and your completion date is now set for less than 30 days after we received your form, you or your conveyancer should contact us as soon as possible.

90 days from your conveyancer receiving the funds from us. If it’s taking longer than this, the conveyancer can write to us to request an extension.

The conveyancer is able to request withdrawals from the account on your behalf as many times as you wish up to completion, there is no minimum withdrawal amount. We’d require completed declarations from both you and your conveyancer each time a withdrawal is requested during this process.

The conveyancer must return the funds within 10 working days of the house purchase falling through and the amount withdrawn will be paid back into your account. If the first house purchase withdrawal closed the account, it’ll be reopened when the funds are returned, but your membership will not be backdated (if this was the only Skipton account you held). If the conveyancer returns less than the amount withdrawn or doesn’t return the funds, you’ll be charged a 25% government withdrawal charge on the shortfall amount.

If your account is closed, it’ll be reinstated and the bonus paid in. We’d record a break in membership with the Society on the system if you don’t have any other accounts with us. We’d then contact you to confirm we’ve received the bonus and ask you what you’d like to do with the amount received. You would have to pay the 25% government withdrawal charge if you choose to withdraw it before the age of 60.

• Subject to our normal affordability assessment and lending criteria at the time, Lifetime ISA customers, who’re buying their first home with a Skipton mortgage, will be eligible for £250 cashback following completion of their mortgage.
• This offer is only valid for mortgages completing from 6 April 2018 to 30 June 2027.
• Cashback will be paid for new mortgages where at least one of the applicants is a Skipton Lifetime ISA customer buying their first home.
• If the mortgage is in joint names and with another Skipton Lifetime ISA holder, only one cashback amount will be paid.
• Cashback will only be available once.

Security is required for any loan.