Firstly, remember that if you surrender your LISA before your 60th birthday and DO NOT use the funds for a qualifying property purchase, there will be a 25% HMRC charge on the amount surrendered. This will not only claim back the government bonus but will also apply a penalty to the remaining amount.

In addition, Metfriendly may make the following charge:

Withdrawal in the same tax year as the investment

Our charge will be 5%.

Withdrawal in the tax year following investment 

Our charge will be 3%.

Withdrawal in later tax years

There will be no charges by Metfriendly.

Accessing your Lifetime ISA for a property purchase or after you turn 60

Assuming that the withdrawal is for a qualifying property purchase (same principle if withdrawing aged 60+), there will be a 2% redemption charge on any funds withdrawn during the tax year that they were invested.

Any funds paid in during previous tax years will not be subject to any redemption charge when they are withdrawn (providing it is for a qualifying property purchase)

E.g.

Joe opened a Lifetime ISA in Aug 2017 and has invested the following:

In June 2019, Joe finds his dream property and is ready to buy his first house. He would like to withdraw the funds for a qualifying property purchase. Because Joe has made contributions into the LISA in the same tax year he is withdrawing for a qualifying property purchase, a small charge of 2% on the current tax year of investment will be applied.

Based on the figures above this would be:

Tax Year 1 – £4,000 invested (plus £1,000 gov. bonus) – 0% redemption charge

Tax Year 2 – £4,000 invested (plus £1,000 gov. bonus) – 0% redemption charge

Tax Year 3 – £4,000 invested (plus £1,000 gov. bonus) – 2% redemption charge (£100 redemption charge)

Total amount invested by Joe – £12,000

25% government bonus – £3,000

Total Invested – £15,000

2% redemption charge (only applied to money contributed in tax year 3) – £100

Total Funds available for first property purchase – £14,900 (plus Metfriendly Annual bonus)

To avoid the 25% government charge on your LISA withdrawals they must be used for a ‘qualifying property purchase‘.

The main conditions are:

• that you have never owned a property before
• the value of the property (which must be in UK) can only be up to £450,000
• if you are buying under a shared-ownership scheme, the price cap applies to the total sale price, not just your share
• it must be for the first-time-buyer to live in as their only residence and not buy-to-let
• the conveyancing must be carried out by an eligible conveyancer
• the withdrawal of funds for the purchase must be at least 12 months after the first subscription to each lifetime ISA, including funds transferred from a Help to Buy ISA

NB. You may buy a property jointly with a partner, however they will only be able to use LISA savings if it is also their first house purchase.

The premiums are invested in the Metfriendly With-Profits fund. For information on what that is and how it works, including a diagram to show the approximate investment mix, please refer to the With-Profits fund page.

In general, you can transfer money from different types of ISAs to your Lifetime ISA, however the rules vary depending on the type.

Other ISAs

You can transfer any amount up to £4,000 from any other “Cash” or “Stocks and Shares” or “Innovative Finance” ISA into a LISA. Any amount transferred will count against the LISA limit and will receive the Government bonus. Current year subscriptions transferred-in will continue to count against the overall annual ISA limit, but previous year subscriptions will not.

Only £4,000 can be transferred (or lesser amount if you have already made current year contributions into the LISA) and will attract the full Government bonus unless the transfer is from another LISA. Therefore if you want to transfer more than £4,000 from another ISA and receive the government bonus on the full amount, it would be necessary to transfer the extra amount(s) in subsequent tax year(s) until you have transferred the total value.

Other Lifetime ISAs

You can transfer any amount without upper limit between LISAs. In respect of current year contributions, the Government bonus will be applied either by the original LISA manager or by the new one (not both!). The amount of your current year LISA contributions continues to apply against your LISA limit and your overall ISA limit.

Help To Buy ISAs

You can transfer up to £4,000 from a ‘Help to Buy’ Cash ISA into a LISA. Investors who are eligible to open a Lifetime ISA may make a transfer of funds from the Help to Buy ISA into a Lifetime ISA, this amount counting towards the Lifetime ISA payment limit, and the government bonus will be added on top.

Table showing treatment of different types of subscriptions and payments into a Lifetime ISA (LISA)

The table below sets out all the rules, but should you have any questions about transferring don’t hesitate to call our office on 01689 891454.

To make a transfer, you will need to be complete our Transfer Application Form (PDF).

• You can cancel for a full refund within 30 days of receiving your policy documents.  Simply contact our Member Services team on 01689 891454 or email [email protected]
• If you wish to change your contributions, add the Metfriendly Escalator or withdraw funds, our friendly Member Services team will be able to discuss your options.

• We do not offer or give financial advice.
• We do not make any form of commission or incentive payments.
• The cost of providing verbal or written information about this product is included in our overall expenses.

Metfriendly, Central Court, Knoll Rise, Orpington, BR6 0JA

Phone: 01689 891454

Email: [email protected]