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Lifetime ISA FAQs

Get a quick answer to all your Lifetime ISA questions by viewing our frequently asked questions below.

I've been affected by COVID-19 (coronavirus), can I withdraw money from my LISA without a withdrawal charge?

On 1st May 2020, HM Treasury announced that the charge to make an unauthorised withdrawal from a LISA had been reduced from 25% to 20% for the period 6th March 2020 – 5th April 2021 (inclusive). 

This temporary reduction has now ended and if you make an unauthorised withdrawal from your LISA from 6th April 2021, you will incur a withdrawal penalty of 25%. However, LISA holders are strongly encouraged not to draw out money from their LISA unless it is absolutely essential.  

Where the withdrawal charge applies, as well as recovering the 25% government bonus, you’ll also lose some of your own savings and will receive less than you invested.

Please see the examples below to see how this may affect you. 

Example 1: Assuming no growth, initial savings of £800 will earn a 25% government bonus of £200 and give you a pot of £1,000.

If you wish to withdraw the entire pot, a 25% charge will apply to the full £1,000. You’ll have to pay a government withdrawal charge of £250. This will leave you with £750, which is less than you originally paid in.

If you only wish to access some of your money, you’ll have to take the withdrawal charge into account when requesting funds. You’ll have to withdraw more than the amount you need, to cover your needs and the 25% withdrawal charge. 

Example 2: If you need enough cash to cover a £75 bill, you’ll have to withdraw more than you actually require. Withdrawing £100 means you pay a 25% withdrawal charge of £25, and receive £75 in cash to meet the bill.

How can I fund my Lifetime ISA?

You can save up to £4,000 a year and can continue to pay into your Lifetime ISA until you reach 50. The £4,000 limit, if used, forms part of your overall annual ISA limit.  Please note, we need to receive your initial investment within 30 days of account opening and prior to your 40th birthday (unless you are transferring an existing LISA from another provider).

You can make your initial deposit by electronic transfer from your bank or building society.

Your bank or building society will require the following information:

  • Sort code: 23-59-54
  • Account number: 00000008
  • Reference: Your new Newcastle Building Society account number / reference number.

If any of the above information, including your reference, is missing or incomplete the payments may be sent back to your bank and not credited to your Newcastle Building Society account.

Or, please send us a cheque made payable in your name(s) quoting your Newcastle Building Society account number.

This will be your initial payment and no further payments will be taken unless you set up regular payments to this account. You can do this by setting up a standing order with your bank / building society and quoting the sort code, account number and reference information above.

Please make sure that you correctly quote the beneficiary name and payment reference when you make a payment.

Confirmation of Payee
"Confirmation of Payee" has been introduced for electronic payments. This service checks the beneficiary name in the payment instruction against the name of the account where the payment is to be sent.

What is Confirmation of Payee?
This is a service being launched between the largest UK banking groups (Barclays, HSBC, Lloyds Banking Group, Nationwide Building Society, Royal Bank of Scotland Group and Santander UK). This service has been designed to help protect payments from scams, fraudsters and payments going to the wrong account by checking the name in your payment instruction with the name of the account where the payment is to be sent, helping to make sure you’re paying the right person. 

We see the value in this new scheme and are keen to participate as soon as the scheme is able to support more banks and building societies.

What is changing? 
When you attempt to make a payment to your savings account with us for the first time you may receive a warning message from your bank or building society. Some examples of the warning messages you may receive might be ‘no match’ or ‘unavailable’. This means your bank have not been able to check the name of the account holder for the payment you are attempting to send and this is because we are not currently part of the Confirmation of Payee scheme.

Sending payments to us
As we are unable to participate in the scheme at this time, when you attempt to make a payment to us for the first time you may get a response from your bank informing you that the name does not match, or is unavailable, due to the provider of the account you are attempting to send money to not being a member of the Confirmation of Payee scheme.

Until the scheme is extended we will unfortunately not be able to provide a name match response to your bank.

Should you wish to quote ‘Newcastle Building Society’ as the beneficiary (in the payee field) you should then receive a match status.

As always, we encourage you to double check the details you enter are accurate when moving money, including when sending payments to us. 

If you have any concerns please contact us on 0345 734 4345 (lines are open 8am-6pm, Monday to Friday), or visit us in branch where we'll be happy to help.

For further information on Confirmation of Payee please visit UK Finance or Pay UK.

Who is eligible for a Lifetime ISA?

You can open a Lifetime ISA if you are aged over 18 but under 40 years old when you open and make the initial investment. 

Additionally, you must be either:

  • a resident in the UK,
  • a Crown Servant (for example a diplomat or civil servant), or
  • the spouse or civil partner of a Crown Servant.
How much can I invest?

You can save up to £4,000 a year, and can continue to pay into your LISA until you reach 50. The account can stay open after then, but you can’t make any more payments into it and you will no longer receive the government bonus. The £4,000 limit, if used, forms part of your overall annual ISA limit.

Your savings will be kept on a tax-free basis for as long as you keep the money in your Lifetime ISA.

How do I apply for a Lifetime ISA?

You can apply online for your Newcastle Cash Lifetime ISA. Once your account is open, you can fund from £1 and then manage your savings online, by telephone or post.

Is the Lifetime ISA right for you?

The Lifetime ISA may be a suitable account if the below statements apply to you:

  • You have never owned a home and want to save to buy a house in the UK worth up to £450,000.
  • You want to save towards your retirement.

The Lifetime ISA is not right for you if you will need access to your savings for another reason, or an emergency, as you may get back less than you have saved. Additionally, the Lifetime ISA is not right for you if you intend to purchase your home within 12 months.

When can I withdraw from my Lifetime ISA?

Lifetime ISAs are designed for those saving to buy their first home, or saving for their retirement. 

You will be charged a government withdrawal charge of 25% of the amount you withdraw if you try to withdraw your money for any reason other than:

  • Buying your first home
    • The home you purchase is in the UK
    • You’re buying your home with a residential mortgage (i.e. not Buy to Let)
    • You use a conveyancer or solicitor to act for you in the purchase, and the funds are paid directly to them by your Lifetime ISA provider
  • You are 60 years or older
  • If you are terminally ill with less than 12 months to live
  • In the event of your death
  • Transferring to another Lifetime ISA provider

Please note, your Lifetime ISA must be open for at least 12 months before you can withdraw funds from it to buy your first home.

The Lifetime ISA withdrawal charge is designed so that the Government recovers the bonus and any investment growth received. Your savings may be reduced and the amount you get back may be less than you paid in.

If I change my mind on having a Lifetime ISA, how do I close my account?

You have 30 days from the initial account funding date to change your mind. You can cancel your account by letting us know in writing during this period and your cancelled ISA won’t count as a Lifetime ISA subscription. 

You will be able to open another Lifetime ISA in that tax year if you’re still eligible. If you choose to cancel you will get back the full amount you have paid in. You will not be entitled to the government bonus or interest within the right to cancel period.

I already have a Cash ISA – is that okay?

You can have both a cash ISA and a Lifetime ISA, however, deposits into both will count towards your overall ISA allowance. 

Each tax year, which runs from 6th April to the following 5th April, you are able to invest a certain amount into an ISA. 

For the 2021/2022 tax year, this is £20,000. Your £4,000 Lifetime ISA allowance is part of this overall allowance.

Can I have more than one Lifetime ISA?

You can, however 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. 

For each Lifetime ISA you open, you will need to wait 12 months before being able to instruct your conveyancer when buying your first home.

When will the government bonus be paid to my account?

We will claim the 25% bonus from HMRC on your behalf. HMRC will calculate the bonus based on the contributions you have made each month. 

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.

The bonus is paid on all contributions you make before you reach the age of 50.

If I withdraw from my Lifetime ISA and pay the 25% charge, will this apply to the amount I’m withdrawing or my full balance?

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 actionsYear 1Year 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
Accessing my LISA savings

You’ll need to complete an Investor Declaration form to access your Lifetime ISA funds. We must receive this from your conveyancer, who will in turn complete a Conveyancer Declaration confirming your eligibility to withdraw penalty free. 

Once we receive the correct information from your conveyancer, we will confirm you're happy before transferring the money to your conveyancer within 30 days. From this point the purchase needs to complete within 90 days or your conveyancer needs to apply for an extension.

If the purchase doesn’t proceed and the money is not returned (unless an extension has been agreed) the government withdrawal charge of 25% of the amount withdrawn will apply.

When I’m buying a house, what can I use the money for?

You will only receive the Government’s 25% bonus if you go on to use the savings in your Lifetime ISA towards the deposit on your first home and/or towards your retirement. 

If you make a withdrawal not connected to these two events then a 25% penalty will apply to the amount you withdraw. This will recover the Government’s bonus and you may get back less than you have saved.

When can I access my Lifetime ISA savings?

For those saving to buy their first home, you must have held your Lifetime ISA for over 12 months to use the funds.

Can I use a Lifetime ISA to buy a house with someone else?

If both you and the person you are buying your home with are first time buyers, you can both use your Lifetime ISA for the purchase of your home without paying a withdrawal charge.

If you are a first time buyer, but the person you are buying your home with has owned a property before, then they will not be able to use their Lifetime ISA (if they hold a Lifetime ISA) for the purchase of your home without paying a withdrawal charge. However you, as a first time buyer, would still be able to use your own Lifetime ISA towards the price of the home that you are buying together.

In both cases the price of the home you’re buying must not exceed £450,000 if you wish to use your Lifetime ISA towards it without paying a withdrawal charge.

Are there any restrictions on the house I can purchase?

Your new home must not exceed the value of £450,000 and the property must be purchased in the UK with a mortgage, but not a Buy to Let mortgage. You must occupy the property as your main residence.

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

You have 90 days from your conveyancer receiving the funds from us to complete your property purchase. If it’s taking longer than 90 days, the conveyancer can write to us to request an extension.

What if the house purchase falls through?

If your purchase does not complete within 90 days of the withdrawal, your conveyancer must tell us and return the amount withdrawn to the Newcastle Cash Lifetime ISA within 10 working days, unless your conveyancer applies for an extension under the ISA regulations.

How many times can my conveyancer request withdrawals from the Lifetime ISA before the house purchase completes?

The conveyancer is able to request withdrawals from the account as many times as you wish up to completion, there is no minimum withdrawal amount. We’d require completed declarations from both you and your conveyancer each time a withdrawal is requested during this process.

If I have a Lifetime ISA and a Help to Buy ISA, can I use the bonus from both when buying my first home?

You are only eligible to claim the bonus from one of the government schemes.

What if I want to retire later?

This won’t affect your Lifetime ISA, it just means you’ll have access to your Lifetime ISA before you retire. As it’s based on age rather than retirement age, you can withdraw your Lifetime ISA at 60, transfer to another savings account or leave your funds in your Lifetime ISA.

Is a Lifetime ISA a good way to save for my retirement?

We can't give you advice on whether the account is suitable for you as a retirement fund.

A Cash Lifetime ISA may not be the best option for your retirement savings. If you are thinking about one as a way of boosting your retirement savings then you should think about when you intend to retire, what other provisions for retirement you are making (such as a pension) and whether a Lifetime ISA will help you meet your savings goals (for example, will it help provide sufficient income in retirement).

You should consider if saving in a Cash Lifetime ISA is the right option for saving towards your retirement. If you are employed, you should consider the potential availability of a workplace pension scheme through an employer, which provides employer matched contributions, 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 contributions by an employer (if any) 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).

A financial adviser will be able to help you map out the best route to plan for your retirement.

Can I transfer a partial amount to my Newcastle Cash Lifetime ISA from my previous Lifetime ISA provider?

No, we only accept full Lifetime ISA transfers.

How long does it take to transfer a Cash Lifetime ISA to Newcastle Building Society?

The transfer will commence once we have received the transfer instruction and any documentation required to support your application. 

A transfer request should be completed within 15 business days from when the transfer request is received (for a Cash Lifetime ISA transfer) and 30 business days for a Stocks and Shares Lifetime ISA transfer. 

If you do send funds to us before the Lifetime ISA transfer is complete, they will be retained by us and we will only credit these to your account once the Lifetime ISA transfer has completed. 

You will not receive any interest on these funds until they have been applied to your Lifetime ISA.

How long will it take to transfer my Newcastle Building Society Cash Lifetime ISA to another provider?

The transfer will commence once we have received the transfer instruction and any documentation required.  

A transfer request should be completed within 15 business days from when the transfer request is received.  

Can I transfer my ISA into a Lifetime ISA?

Lifetime ISAs are not currently part of the eISA transfer service. A Lifetime ISA can only be funded via a completed Lifetime ISA transfer or via new investment.

Can my Lifetime ISA transfer be processed electronically?

Lifetime ISAs are not currently part of the eISA transfer service. Any Lifetime ISA transfers must therefore be completed via a paper transfer between your existing and new Lifetime ISA providers.

Why can’t I send funds prior to my Lifetime ISA transfer being complete and will interest be paid on the additional funds sent in prior to the transfer?

The Newcastle Cash Lifetime ISA is not open until the Lifetime ISA transfer from the previous provider has completed. No interest will be paid on any additional funds received until the transfer is complete and the Newcastle Cash Lifetime ISA is open.

Why haven’t I received my outstanding government bonus yet?

There are two scenarios why you may have not received this: 

a) If the transfer date has taken place before your previous Lifetime ISA provider has received the monthly bonus payment from HMRC, it is the responsibility of the previous Lifetime ISA provider to forward the bonus payment onto Newcastle Building Society once they have received it. This will be automatically credited to your new Lifetime ISA once received by us.

b) If the transfer date has taken place after the last monthly bonus payment from HMRC and before the next monthly bonus payment request date to HMRC, we will automatically ensure the bonus request is included within the next payment request. You will receive confirmation of the amount received once this has been credited to your Lifetime ISA.

Can the Lifetime ISA be used in conjunction with other government schemes?

If you have 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.

If a have a Lifetime ISA and live in the property as my main residence am I allowed to rent the rooms out?

Yes, on completion of the purchase, the Lifetime ISA investor must occupy the property as their only or main residence. A withdrawal of funds to purchase land, or property to be let by a Lifetime ISA investor will incur a withdrawal charge.

How do I withdraw my funds for a property purchase?

When you come to buy a property, you’ll need to tell your conveyancer you want to use part, or all, of your 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 confirm we’ve received the request and then pay the amount requested to the conveyancer within 30 days without applying the government withdrawal charge. 

Your conveyancer must advise us that your purchase has completed within 10 days of completion.

Where do I get an Investor and Conveyancer Declaration forms?

Please see below for Conveyancer and Investor Declaration forms:

I made an unauthorised withdrawal from my Lifetime ISA (LISA) due to coronavirus, am I able to claim the charge back?

Yes, if you made the withdrawal between 6th March 2020 and 5th April 2021 (inclusive). During this period, the charge to withdraw from a Lifetime ISA was 20%. 

If you withdrew funds during this period and were charged at the rate of 25%, the difference will be paid back into your Lifetime ISA. Please contact us if this has not happened automatically.