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Frequently Asked Questions about the Lifetime ISA

Here are the questions we get asked a lot about our Lifetime ISA. If you can’t find the answer you’re looking for, please contact the team.

  • Is a Lifetime ISA right for me?

    It’s important to note that 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. You can withdraw money from your Lifetime ISA if you’re buying your first home, aged 60 or over, or terminally ill, with less than 12 months to live.

    If you close your Lifetime ISA after you reach the age of 40 you will not be able to open a new one.

    If you make a withdrawal for any other reason (also known as an unauthorised withdrawal), you will be charged 25%. This recovers the government bonus gained on your original savings.

    For example, assuming no growth, initial savings of £800 will earn a 25% government bonus of £200 and give you a Lifetime ISA pot of £1,000. If you wish to make an unauthorised withdrawal, you will be charged 25% of the pot, in this case £250, alongside your withdrawal. You should therefore take the withdrawal charge into account when requesting funds.

  • I'm turning 40 soon. Can I still open a Lifetime ISA with you?

    Yes, you can still open a Lifetime ISA with us if you’re turning 40 soon. However, you must deposit your initial funds at least 14 days before your 40th birthday otherwise we cannot guarantee your Lifetime ISA will be set up in time.

    You will also need to ensure your information with HMRC is up to date, as any differences will stop us from being able to process your application.

  • Does a Lifetime ISA affect the rest of my ISA allowance?

    You can open and pay into multiple ISAs of the same type each tax year. That means you can pay into multiple cash ISAs, for example, or open several stocks and shares ISAs, but must not exceed the annual ISA allowance. You can only have one Lifetime ISA however and the combined value of your Lifetime ISA and your other ISAs must not exceed the annual ISA allowance.

  • What happens if I go over my Lifetime ISA allowance?

    If you make a payment that exceeds your annual Lifetime ISA allowance (£4,000 for the 2024/25 tax year), Bath Building Society will return the whole payment. You can make another payment providing it doesn’t take you over your annual allowance.

    For example, if you have already paid £3,000 into your Lifetime ISA within the current tax year and you then deposit £1,500, we will return all of the payment of £1,500 to you as it exceeds your annual £4000 allowance. If you then deposit £1,000, we will accept the payment as it meets your £4,000 allowance.

  • If I change my mind about having a Lifetime ISA can I cancel it?

    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 deposited. If you change your mind, you can still open another Lifetime ISA within the same tax year.

  • When can I access my Lifetime ISA?

    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.

    You may also withdraw money if you are terminally ill, with less than 12 months to live.

    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.

  • What is the Government withdrawal charge?

    When you open a Lifetime ISA there are rules around how, when and what you can withdraw this money for.

    Any withdrawals within the first 12 months of your first payment into a Lifetime ISA will incur a 25% Government withdrawal charge, which means you would get back less than you paid in. After that, you can withdraw money to buy your first home, but for any other withdrawals before the age of 60, the Government withdrawal charge will apply (unless you are diagnosed with a terminal illness).

  • How is the Government withdrawal charge calculated?

    The Government withdrawal charge is only applied to the amount you withdraw and is charged at 25%. This means 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 into the account.

    The following example of how the Government charge is calculated is for a non-house purchase withdrawal before the age of 60 and doesn’t include any interest earned.

    You open your Lifetime ISA account with£4,000
    The Government bonus is added£1,000
    You make a chargeable withdrawal£5,000
    The Government withdrawal charge (25% of the £5,000 withdrawal)-£1,250
    You receive back£3,750
    You lose this much money-£250
  • When will the Government bonus be paid into my Lifetime ISA?

    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.

    For example:

    1. Pay into your Lifetime ISA between 6th April and 5th May
    2. The bonus is then calculated between 6th May and 20th May
    3. Your bonus is paid by 3rd June

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

  • How can I use the Lifetime ISA to purchase my first home?

    You can use your savings to help you buy your first home if all the following apply:

    • The property costs £450,000 or less
    • You buy the property at least 12 months after you make your first payment into the Lifetime ISA
    • You use a Conveyancer or Solicitor to act for you in the purchase – the ISA provider will pay the funds directly to them
    • You’re buying with a mortgage

    The property must be in the UK and it must be your sole residence immediately upon completion. Withdrawals that do not satisfy these conditions will be subject to a government withdrawal charge of 25% of the amount withdrawn.

  • What if I inherit a house or I am left one on trust, can I use my Lifetime ISA?

    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.

  • Can I use the Lifetime ISA on a second property?

    No. Buy to let mortgages do not meet Lifetime ISA eligibility criteria.


  • Can I buy my first home with someone else who also has a Lifetime ISA?

    Yes. If the person you’re buying with has a Lifetime ISA, they can use their savings and government bonus too.

    They’ll pay a 25% withdrawal charge to use their Lifetime ISA savings if they own, have owned or have a legal interest in any other property (for example, if they’re a beneficiary of a trust that includes property).

  • Can I use a Lifetime ISA to buy a house under the shared ownership scheme?

    If you are 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 cannot be used again without paying the 25% government withdrawal charge to buy any further shares.

  • Can I use both my Lifetime ISA and my Help To Buy ISA to buy my first home?

    If you have both a Lifetime ISA and a Help to Buy ISA, you can only use the government bonus from one of them to buy your first home.

  • Can I use my Help To Buy ISA to top up my Lifetime ISA?

    You can transfer money from a Help to Buy ISA to a Lifetime ISA. However, if you transfer money from a Lifetime ISA to a Help to Buy ISA you’ll have to pay the 25% withdrawal charge.

    *Please note we are not currently accepting Lifetime ISA Transfers in.

  • When should the investor and conveyancer declaration forms be sent?

    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.

  • How soon will my conveyancer receive my money ahead of the completion date?

    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.

  • How long do I have to complete my house purchase after my conveyancer receives funds?

    You will have 90 days from the date that your conveyancer receives the funds from us to complete your purchase. If it is likely to take longer than this, the conveyancer should write to us to request an extension.

  • What if my house purchase falls through?

    Sometimes house purchases will not reach completion. If this happens, the conveyancer must return the funds to Bath Building Society within 10 working days. The amount withdrawn will be paid back into your account. If the withdrawal closed your account, we will reopen it for you when the funds are returned. If your conveyancer returns less than the amount withdrawn or doesn’t return the funds, you will be charged a 25% government withdrawal charge on the shortfall amount.