Lifetime Isa

Your guide to the UK savings account that could boost your savings with a bonus of 25% when buying your first home

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Introduced by the government in 2017 to prepare young people for the future, the Lifetime ISA is a government-supported savings account exclusively offered to 18–39-year-olds in the UK.

Once opened, a person can add as much into this account as they want every year, with the government supporting them with a contribution worth 25% of any money put away in the Lifetime ISA that financial year, capped at £1000.

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How does the Lifetime Isa work?

In practice, if a person was to save £4000 a year, the government would top up their account with an additional £1000 (25% of £4000). If they saved £2000 a year, the government would contribute an additional £500, and so on. However, if you saved £5000 a year, the government would still only contribute £1000 as this is the upper limit of their yearly contributions.

It’s worth pointing out the Lifetime ISA does have certain withdrawal restrictions, with account owners only able to entirely take out the funds once they reach retirement age or decide to buy their first home. The account must also be open for at least 12 months before being used to buy a house.

If there is a need to take it out earlier, a withdrawal penalty worth 25% of the savings in the account will be applied. For more information on withdrawing money from a Lifetime ISA, please visit the Government’s dedicated website page.

Finally, the government has also placed a cap on the value of the home the account holder is allowed to buy, limiting first homes to properties valued at £450,000 or less.

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How to open a Lifetime Isa

There are several Lifetime ISA providers to choose from, including the likes of Barclays, Moneybox and the Nottingham Building Society among others.

Simply fill out their respective application forms and decide whether you want to make your contributions in one lump sum each financial year or set up a monthly standing order.

It’s worth remembering that to open a Lifetime ISA, you must be a UK citizen and be aged between 18 and 39.

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How to use your Lifetime ISA to buy an Anwyl home

The first step to using your Lifetime ISA is to choose the Anwyl home you want to buy! If you haven’t done so already, visit our developments to find the right house for you.

As per the Lifetime ISA’s requirements, your chosen home will need to be the first ever home you buy and will need to be valued at £450,000 or less.

If it matches these criteria, and your account has been open for a minimum of 12 months, your chosen solicitor can request to withdraw your funds and use it to help purchase your new Anwyl home.

Your money can take a minimum of 10 working days to reach your account, and you will need to complete the purchase within 90 days of the funds being requested.

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FAQs

Yes, you can open both a Lifetime ISA and a Cash ISA at the same time. The only restriction when it comes to an ISA is the annual ISA allowance set by the government.

The government sets a yearly £20,000 limit on ISA contributions.

So, for example, £4000 a year could be put away into a Lifetime ISA to receive the maximum bonus from the government of £1000, while the remaining £16,000 could be put into a Cash ISA.
For anyone with a Lifetime ISA thinking about switching providers, you can and it’s very easy to do. Your savings and the government’s contribution towards them won’t be affected at all.

However, it’s worth noting that if you decide to withdraw your money from a Lifetime ISA to put it into a Cash ISA or a Stocks & Shares ISA, the government will require you to pay a withdrawal charge worth 25% of your Lifetime ISA savings.
A Lifetime ISA can’t be used to purchase a buy to let properties. They can strictly only be used to purchase a first home and a home the buyer intends to live in themselves.
There are 2 circumstances in which you can withdraw money from a Lifetime ISA without withdrawal penalties. These are:
- When you want to buy your first home
- When you retire
Outside of these circumstances, a person withdrawing money from a Lifetime ISA will be penalised, with the government requiring an account holder to pay the government back 25% of the account’s holdings.

The account will also need to have been opened for a minimum of 12 months before you can withdraw money to buy your first home.
The government pays out a bonus monthly, usually towards the end of the month.

It is not a bonus that needs to be applied for, as it will be provided automatically every month by the HMRC.
While you can technically have more than one Lifetime ISA in your name, you can only put money into a single Lifetime ISA over the course of the tax year.
Yes, a Lifetime ISA is considered halal because the government’s bonus is more of an incentive or a gift rather than the proceeds of interest accrued.
A Lifetime ISA can’t be opened for a child as it is only available for UK adults between the ages of 18 and 39.

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