In this article, we'll cover:
What is a Lifetime ISA?
A Lifetime ISA (LISA) is a product designed by the government to help you to purchase your first home or save towards retirement. Any UK tax resident aged 18-39 can open a LISA.
You can pay in up to £4,000 per tax year and you’ll receive a 25% government bonus on your contributions. That means for every £4 you save, you get £1 for free - if you pay in the maximum £4,000 you’ll receive a £1,000 bonus. You can pay into your Lifetime ISA every year until you turn 50.
A 25% government penalty applies if you withdraw money from a LISA for any reason other than buying your first home (up to £450,000) or for retirement, except in cases of terminal illness.
If you have an existing Lifetime ISA with another provider and would like to transfer this to Moneybox, you can get started by heading to Settings > Transfer in an existing ISA. Once you've submitted your details, we’ll contact your current provider, and most transfers will typically complete within 3 weeks.
How does the bonus work?
LISA bonuses are paid out by HMRC at the end of each month, and are based on your total collections in the previous month.
HMRC doesn't pay out bonuses on a set date each month, but this is typically in the final week of the month, usually between the 24th and the end of the month.
LISA bonus ‘windows’ run from the 6th of the month to the 5th of the following month (e.g. the 6th of January to the 5th of February would be the January bonus window). If you were to make a contribution to your LISA during this period, you’d receive the bonus at the end of February 👍
If you have a pending bonus, you can see when this is due to be paid in Discover > Tools > Lifetime ISA Bonus. (Please note you'll need to be on the latest app version to see this!)
Using a LISA for your first home
To make a qualifying withdrawal from your LISA for a first home purchase, you must meet the following criteria:
The property costs £450,000 or less.
You buy the property at least 12 months after you open a Lifetime ISA. Your LISA is considered open from the date of your first contribution into the account.
You use a conveyancer or solicitor to act for you in the purchase. Moneybox will pay the funds directly to the conveyancer or solicitor.
You’re buying with a mortgage (using a buy to let mortgage is not permitted).
You have never owned a property before. This includes properties in the UK or in any other country. If you owned a property, or a share of one, through inheritance this counts as owning a property.
We’ve set out the main Lifetime ISA details you need to know in our infographic below 👇
