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 2017/2018 and 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.

If you close your Lifetime ISA during the 2017/2018 tax year there will be no government bonus or withdrawal charge.

In subsequent years, if your provider allows it, 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.

You can 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secure message confirming you’d like to close your Lifetime ISA and include the bank details of where you’d like to the withdrawn funds to be sent.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.

After 5 April 2018, 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, or if you close your account in the 2017/18 tax year. Withdrawn funds cannot be replaced without affecting your Lifetime ISA allowance.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 up to £10,000 if you pay in your full allowance each year.

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.

You can transfer from a Stocks and Shares Lifetime ISA to the Skipton Online Cash Lifetime ISA without incurring the 25% withdrawal charge. To do this, visit our Transferring your ISA page or ask for a transfer form in your local branch.

The 25% government bonus in the 2017/18 tax year will be paid after the tax year has ended. The government has indicated the bonus will be paid within 28 days of 6 April 2018. You’ll start earning interest on the bonus from the date we receive it from HMRC.

From 2018/19 tax year the government will pay the bonus monthly, based on the contributions you have made each month. This will take four to nine weeks to be paid into your account.

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.

You can make a single transfer of any funds you had built up in your Help to Buy ISA as of 5 April 2017 into a Lifetime ISA by the end of the current tax year (5 April 2018) without it counting towards your £4,000 annual Lifetime ISA limit and you’ll receive the 25% government bonus on the whole amount. If you don’t transfer the full amount in one go, any further transfers will count towards your annual Lifetime ISA allowance.

You can transfer anything you’ve paid into, and any interest added to, a Help to Buy ISA during the 2017/18 tax year into a Lifetime ISA, but this will count towards your annual Lifetime ISA allowance.

You will also be able to transfer funds from a Help to Buy ISA after 5 April 2018, but this will also count towards your annual Lifetime ISA allowance. Note that you can use the bonus from either a Lifetime ISA or a Help to Buy ISA – and not from both – to buy your first home.

If you’re thinking about transferring an existing Help to Buy ISA or other ISA into your Skipton Online Lifetime ISA in this tax year, our window to do so closes on 1 March 2018. After this date, you will no longer be able to apply to transfer into your Skipton Online Lifetime ISA in the 2017/18 tax year.

  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? Annually for 2017/18 tax year and monthly from 2018/19. 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

In the current tax year (Until 5 April 2018), you can make a single transfer of the balance of a Help to Buy ISA as at 5 April 2017 without it counting towards your £4,000 annual Lifetime ISA allowance. The whole amount you pay in will benefit from the 25% government bonus. 

The following transfers will count towards your £4,000 Lifetime ISA allowance:

  • Subsequent transfers of previous tax years’ Help to Buy ISA savings
  • Transfers of current tax year’s Help to Buy ISA savings
  • Any transfers after 5 April 2018

You can only use the bonus from either a Help to Buy ISA or a Lifetime ISA - and not from both - to buy your first home.

If you’re thinking about transferring an existing Help to Buy ISA or other ISA into your Skipton Cash Lifetime ISA in this tax year, our window to do so closes on 1 March 2018. After this date, you will no longer be able to apply to transfer into your Skipton Cash Lifetime ISA in the 2017/18 tax year.

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. Therefore, if you intend using the money in your Lifetime ISA for this purpose, the only way to ensure that you receive a 25% government bonus on the money you’d built up in your Help to Buy ISA before 6 April 2017 without it affecting your Lifetime ISA allowance is to transfer it before the end of this tax year. You can use your Lifetime ISA to buy your first home 12 months after opening it.

If you’re thinking about transferring an existing Help to Buy ISA or other ISA into your Skipton Online Lifetime ISA in this tax year, our window to do so closes on 1 March 2018. After this date, you will no longer be able to apply to transfer into your Skipton Online Lifetime ISA in the 2017/18 tax year.

If you’re thinking about transferring an existing Help to Buy ISA or other ISA into your Skipton Online Lifetime ISA in this tax year, our window to do so closes on 1 March 2018. After this date, you will no longer be able to apply to transfer into your Skipton Online Lifetime ISA in the 2017/18 tax year.

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

Can I transfer into Lifetime ISA from Details
Cash ISA, Stocks and Shares ISA or innovative Finance ISA Yes 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 Yes Yes, in the 2017/2018 tax year, the first transfer of money saved up to 5 April 2017 is treated as additional funds to the £4,000 Lifetime ISA allowance.
Subsequent transfers in the 2017/2018 tax year, transfers made from Help to Buy funds added after 5 April 2017, and any transfers made from the 2018/2019 tax year onwards, will all count as part of the £4,000 annual Lifetime ISA allowance.
Another Lifetime ISA (Cash) Yes Yes, there is no government charge to do this and your annual Lifetime ISA allowance is not affected.
Another Lifetime ISA (Stocks & Shares) Yes Yes, there is no government charge to do this and your annual Lifetime ISA allowance is not affected.

If you transfer out of your Lifetime ISA into a different type of ISA (Cash ISA, Stocks & Shares ISA or an Innovative Finance ISA) after the 2017/18 tax year, the transfer will be subject to the 25% government withdrawal charge. This means you’ll get back less than you paid in.

During the 2017/18 tax year, you can transfer your Lifetime ISA to a different type of ISA without having to pay the government withdrawal charge, but you won’t receive the government bonus either.

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


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 use your Lifetime ISA to help buy your home as long as the following criteria are met:

  • You have held your Lifetime ISA for at least 12 months.
  • If you are buying with someone else, you can both use a Lifetime ISA as long as neither of you has owned a property previously.
  • The value must not exceed £450,000.
  • 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.

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 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 you're buying with someone else, you can both potentially use a Lifetime ISA if you are both first time buyers. If your partner has previously owned property either through buying a house, or having a part share in a property for example, they wouldn’t be able to use their Lifetime ISA for this without paying the government 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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