Guidance

Lifetime ISAs for ISA managers

Find out the rules on managing Lifetime ISAs including payments, transfers and withdrawals.

Overview 

Lifetime ISAs became available from 6 April 2017. While the account is subject to many of the same rules as other ISAs it has specific differences including, amongst other matters:

ISA and Lifetime ISA managers

As a Lifetime ISA manager, you must be approved by HMRC to offer a Lifetime ISA, even if you already have approval to offer a cash or a stocks and shares ISA.

You must hold Financial Conduct Authority (FCA) permissions before you apply for approval from HMRC to offer Lifetime ISAs. Approved ISA managers can also apply to become an approved Lifetime ISA manager.

You do not need to have HMRC approval to offer cash or stocks and shares ISAs if you only want to offer Lifetime ISAs to their investors. However, the online digital service is only available to existing ISA managers at this time.

If you want to become a Lifetime ISA manager only, you’ll need to apply for approval by HMRC to be an ISA manager, before you can use the online service.

When an application to offer Lifetime ISAs has been approved by HMRC an output will be issued to the Lifetime ISA manager and the digital service will show that the application has been successful.

This output and the digital service will contain instructions on how to activate the Lifetime ISA Application Program Interface (API) software. This helps Lifetime ISA managers make transactions securely with HMRC.

The HMRC API has been designed to work with any authorised third party software that can submit data in the way our API expects.

The specification for HMRC’s Lifetime ISA API and the authentication method (OAuth 2.0) can be found on the HMRC API Developer Hub.

ISA managers who want to offer Lifetime ISAs must register with the developer hub before they can start system testing.

Lifetime ISA investor

Lifetime ISAs may only be opened by an eligible individual either on or after their 18th birthday but not once the individual has reached 40 (other than an account opened to receive a transfer from another Lifetime ISA, a defaulted Lifetime ISA payment subscription or a returned withdrawal after a failed first time residential purchase).

Eligible individuals are able to open more than one Lifetime ISA during their lives, but are only able to contribute to one Lifetime ISA in each tax year (other than for a defaulted Lifetime ISA subscription or a returned withdrawal following a failed first time residential purchase).

More information can be found in the table showing treatment of payments and transfer in subscriptions.

You can also read worked examples of lifetime ISA investors (PDF, 86.7KB, 1 page) .

Opening a Lifetime ISA

Individuals must make an application to open a Lifetime ISA with the Lifetime ISA manager in the tax year in which the first payment is made to that account.

Details of the ISA application process are set out in applications and terms and conditions.

ISA managers are required to collect the following information in addition to the information that they already collect for other types of ISAs.

In particular:

  • the application must specify the first tax year to which the application relates

  • the application must contain a statement that the declaration shall have effect for each year in which the applicant makes a payment to the Lifetime ISA account regardless of the fact there may have been a break of more than one year

  • the application declaration must contain a statement that the applicant has not and will not make payments that exceed the overall Lifetime ISA payment limit and overall ISA allowance

  • the authorisation given by the applicant to the manager must also include an authority to:

    • hold Lifetime ISA government bonus payments

    • submit Lifetime ISA bonus claims to HMRC

    • withhold and deduct from the balance in the account and pay to HMRC any charges due on withdrawals

    • to make a record in writing in accordance with paragraph 12B(7)(e) of the Individual Savings Account Regulations where required to do so

Individuals cannot open a Lifetime ISA once they’ve reached 40 years of age (other than an account opened to receive a defaulted Lifetime ISA subscription or a returned withdrawal after a failed first time residential purchase).

Investors can transfer their Lifetime ISA to another Lifetime ISA manager after their 40th birthday without incurring a withdrawal charge.

Investors can transfer their Lifetime ISA into a different type of ISA either with the same or another ISA manager but the Lifetime ISA manager must deduct the 25% withdrawal charge which applies before the balance is transferred.

Payments, current year payments and qualifying additions

For additional detail in respect of payments, current year payments and qualifying additions to a Lifetime ISA read ISA subscriptions.

Payments to a Lifetime ISA may be made any time before the account investor’s 50th birthday. Lifetime ISA managers must not accept payments from an account investor once they reach 50 other than a defaulted Lifetime ISA subscription or a returned withdrawal after a failed first time residential purchase).

Payments made by an investor to a Lifetime ISA can be either:

  • ‘current year payments’ made after 6 April 2017 which count towards the Lifetime ISA payment limit and will be eligible for a government bonus

  • between 6 April 2017 and 5 April 2018 a single transfer of funds from a Help to Buy ISA up to the value held in that account on 5 April 2017 does not count towards the Lifetime ISA payment limit, but will be eligible for a government bonus (Help to Buy ISA interaction with Lifetime ISA)

  • defaulted Lifetime ISA subscription or a returned withdrawal after a failed first time residential purchase).These payments do not count towards the Lifetime ISA payment limit and will not be eligible for a government bonus

The payments described in the first 2 bullets above are ‘qualifying additions’ - payments into a Lifetime ISA which are eligible for a government bonus.

The following are current year payments into a Lifetime ISA:

  • a payment of cash

  • a transfer of shares from a Schedule 3 Save As You Earn (SAYE) option scheme, an approved profit-sharing scheme or a Schedule 2 Share Incentive Plan (read ISA subscriptions for more information)

  • additional permitted subscriptions after the death of a spouse or civil partner of a Lifetime ISA account holder, irrespective of the type of ISA the deceased held or on closure of a Help to Buy ISA (read SA subscriptions and additional permitted subscriptions for more information)

  • a transfer of investments, which satisfy the requirements to be Lifetime ISA investments, from an ISA other than a Lifetime ISA

  • a transfer of cash from an ISA other than a Lifetime ISA

  • defaulted investment subscriptions (you can read ISA subscriptions for more information)

  • defaulted cash account subscriptions (you can read ISA subscriptions for more information)

The following are not current year payments:

  • defaulted Lifetime ISA payments (you can read ISA subscriptions for more information)

  • returned Lifetime ISA withdrawals after the failed first time residential purchase

  • interest or growth within a Lifetime ISA

  • government bonus payments

  • various rebates, compensation or other payments described in managing an ISA

  • cash or investments transferred to a Lifetime ISA from another Lifetime ISA

Investors cannot make current year payments in excess of the Lifetime ISA payment limit.

The annual Lifetime ISA payment limit’s £4,000 for the tax years 2017 to 2018 and 2018 to 2019.

New payments into a Lifetime ISA count against the overall annual ISA subscription limit as well as the annual Lifetime ISA payment limit. However, some current year payments to a Lifetime ISA will count towards the Lifetime ISA limit but not the overall ISA subscription limit.

Some current year payments to a Lifetime ISA will count towards the Lifetime ISA limit but not the overall ISA subscription limit.

These payments include:

  • a transfer from another type of ISA
  • additional permitted subscriptions
  • defaulted cash account
  • defaulted investment subscriptions

More information can be found in the table showing treatment of payments and transfer in subscriptions.

You can also read more on additional permitted subscriptions.

In the case of payments made by way of transfers of shares from a stocks and shares ISA into a Lifetime ISA, the market value of the shares at the date of transfer is to be treated as the payment into the Lifetime ISA. The amount transferred in this way is restricted to the annual Lifetime ISA payment limit.

Refer to subscription by transfer of shares and valuation of shares transferred from Schedule 3 SAYE option schemes, approved profit sharing schemes or schedule 2 Share incentive plans for additional guidance.

In respect of listed shares Lifetime ISA managers should also refer to withdrawals of investments from a stocks and shares ISA.

See worked examples of payments and qualifying additions (PDF, 86.4KB, 1 page) .

Help to Buy: ISA interaction with Lifetime ISA

Investors can open a Help to Buy ISA until 30 November 2019 and contributions to Help to Buy ISAs can continue until 2029.

During 2017 to 2018 tax year only, investors can make a single transfer of funds (including interest) from their Help to Buy ISA up to the total value of their Help to Buy ISA as at 5 April 2017 into their Lifetime ISA. This amount does not count towards the £4,000 Lifetime ISA payment limit. However, any such transfer must not breach the ‘one Lifetime ISA per tax year’ rule.

Funds transferred in this way will be qualifying additions to a Lifetime ISA and are eligible for a 25% government bonus.

Any funds transferred from a Help to Buy ISA to a Lifetime ISA will be treat as current year payments and count towards the annual Lifetime ISA limit if they are:

  • in excess of the amount held in the Help to Buy ISA as at 5 April 2017
  • transferred from a Help to Buy ISA after the single transfer described above has taken place
  • transferred in 2018 to 2019 or subsequent years

When ISA managers transfer Help to Buy ISA funds to a Lifetime ISA provider on or before 5 April 2018 they must separate the transferred amount between:

  • previous year subscriptions made before 6 April 2017 –do not count towards the Lifetime ISA payment limit

  • current year 2017 to 2018 subscriptions and proceeds - do count towards the annual Lifetime ISA limit

Investors do not have to transfer their Help to Buy ISA to a Lifetime ISA.

Investors can save into both types of ISA but they can only use the government bonus from one account to buy their first home.

When investors use their Help to Buy ISA to buy their first residential property and claim a government bonus on that account they cannot make a charge-free withdrawal for a first time residential purpose from a Lifetime ISA.

They can withdraw funds but a withdrawal charge will be applied.

More information can be found in the table showing treatment of payments and transfer in subscriptions.

The operation of the 2017 to 2018 tax year rule means that investors who transfer their Help to Buy ISA to a Lifetime ISA but then subsequently withdraw funds from the Lifetime ISA, during the tax year 2017 to 2018 will be required to close the Lifetime ISA account without receiving any government bonus.

When a Help to Buy ISA is closed on transfer to another ISA, including a Lifetime ISA, the investor is treated as if they’ve made a request to close the Help to Buy ISA under the Help to Buy: ISA scheme rules. When this happens the investor will be provided with either a closing statement, or a closing letter.

Under these circumstances, an eligible conveyancer will still be entitled to apply for a government bonus, on behalf of their investor, within 12 months of the Help to Buy ISA closure date. The government bonus will be paid on the sums held in the Help to Buy ISA at the date of closure.

A government bonus cannot be claimed on both the investor’s Lifetime ISA and the Help to Buy ISA. This means that Help to Buy ISA investors will not be disadvantaged by the 2017 to 2018 rule if they purchase their first residential property during the 2017 to 2018 tax year.

See worked example of help to buy interaction with Lifetime ISA (PDF, 98.7KB, 1 page) .

Transfers

Lifetime ISAs can be transferred between Lifetime ISA managers without incurring a withdrawal charge. There is no limit on the amount transferred. The normal ISA transfer rule applies and any current year payments must be transferred in full to the new Lifetime ISA manager.

Where Lifetime ISA funds are transferred to another Lifetime ISA before any outstanding bonus has been claimed, it’s the receiving ISA manager’s responsibility to claim the bonus due on the transferred funds.

Where the transferring ISA manager has submitted a claim to HMRC for a government bonus which has not been received before the transfer of the Lifetime ISA takes place, it’s their responsibility to subsequently transfer the bonus to the receiving ISA manager when it’s received.

A Lifetime ISA must be transferred within 30 calendar days of the investor’s request.

Lifetime ISAs can be transferred to other types of ISAs. However, the transfer will be treated as a withdrawal from the Lifetime ISA, and will be subject to a 25% withdrawal charge, unless the transfer happens after the investor’s 60th birthday or the investor has informed their ISA manager that they have a terminal illness. The same will apply where Lifetime ISA funds are transferred to any account that is not a Lifetime ISA or to any financial institution that is not an approved ISA manager

When a Lifetime ISA is transferred, the transferring (ceding) manager must provide certain information to the receiving manager (read about transferring an ISA).

The receiving ISA manager must notify the transferring manager whether the receiving account is a Lifetime ISA or not. This is to enable the transferring manager to apply a withdrawal charge if the transfer is to another type of ISA.

When a previous year subscription is transferred to a Lifetime ISA from a different type of ISA, for example from a cash ISA to a Lifetime ISA, the value transferred to the Lifetime ISA will count towards the £4,000 annual Lifetime ISA payment limit but not the overall £20,000 ISA subscription limit for the tax year.

Read payments, current year payments and qualifying additions for guidance in respect of the market value of investments transferred into a Lifetime ISA.

Partial transfers of funds from previous year’s ISA subscriptions are permitted. However, when funds transferred include current year subscriptions the current year element must be transferred in full. When that occurs, the current year subscriptions will count towards the overall £20,000 ISA subscription limit in the usual way.

When cash or investments are transferred into a Lifetime ISA from another type of ISA they’ll be considered as received into the Lifetime ISA on the date of receipt into that account.

As with other ISA transfers, Lifetime ISA managers are not obliged to accept transfers in from another ISA manager.

You can read more information on transferring an ISA.

Government bonus

Government bonuses are claimed, on behalf of an account investor, by the Lifetime ISA manager who holds the Lifetime ISA at the end of the claim period.

During the 2017 to 2018 tax year, the government bonus can only be claimed within 14 days after the end of the tax year, for example between 6 and 19 April 2018. An exception applies where an ISA manager is informed of the death or terminal illness of the investor,

You can read more information on Lifetime ISA reporting.

Claims for government bonus following notification to the Lifetime ISA manager of the death or terminal illness (life events) of an investor can be made to HMRC before the end of the 2017 to 2018 tax year.

Claim periods for these ‘life events’ start on the sixth day of one calendar month to the fifth day of the following calendar month. The due date for such claims is within 14 days after the end of the claim period. The claim period will depend on the date on which the Lifetime ISA manager received the appropriate evidence of the investor’s death or terminal illness.

You can read more information on withdrawals for a first time residential purchase as well as Lifetime ISA reporting.

ISA managers will be informed by HMRC if any claim for a government bonus is rejected. HMRC’s notification will set out the reasons for rejecting the bonus claim.

When an ISA manager receives notification from HMRC that a government bonus has been rejected, the ISA manager must inform the Lifetime ISA investor within 14 days following the date of receipt of the notice.

Following receipt of a rejection notification by the ISA manager, the account investor has 90 days to apply to HMRC for the payment of the government bonus. The ISA manager does not need to support or participate in the investor’s application to HMRC, who will notify the account investor of its decision.

If the account investor is successful, either at the decision, review or appeal stage, HMRC will advise the ISA manager to re-claim the government bonus due.

The effect of any decision is not suspended by the making of such an application for a decision, review or appeal.

If a government bonus has been wrongly paid HMRC has the power to recover the amount from the:

  • Lifetime ISA investor (or former investor as the case may be)

  • Lifetime ISA manager

  • any other person in whom, either directly or indirectly, such amount (or property) was wrongly vested

All of the above shall be jointly and severally liable for repaying the incorrect government bonus.

Lifetime ISA managers are jointly and severally liable to the extent that they hold assets of the investor which can be used to legally deduct an incorrect government bonus from the investor’s account.

If, within a period of 6 years of the end of the claim period, an ISA manager becomes aware of an error(s) in the bonus claim(s) made on behalf of investors (including omissions and inclusions) he must include the correction in the next government bonus claim due or otherwise without delay. All payments, adjustments or repayments must be included in the claim correction.

You can read more information on Lifetime ISA reporting.

HMRC has a right to enquire into a claim or return (within 12 months of its receipt) if they have reasonable grounds for believing an error has occurred and will notify the ISA manager of their intention to make such enquiry.

See worked examples of government bonuses (PDF, 182KB, 1 page)

Qualifying investments

The rules for qualifying investments for a Lifetime ISA are the same rules for qualifying investments for a stocks and shares ISA or cash ISA but not those which qualify for an innovative finance ISA.

Withdrawals, withdrawal charges and charge-free withdrawals

Additional detail on how to treat withdrawals from ISAs can be found in managing an ISA.

Access to Lifetime ISA funds

Lifetime ISA funds are not ‘locked in’ to the account and so may be accessed at any time subject to the account’s terms and conditions set by the ISA manager.

An investor should be able to withdraw their Lifetime ISA savings and investments within 30 days of an instruction to their ISA manager. These rules do not apply to withdrawals for a first time residential purchase.

Non-Life events

In the 2018 to 2019 tax year and all subsequent tax years, withdrawals which do not result from a life event will be subject to a 25% withdrawal charge. This includes withdrawals of growth, interest or government bonus from the Lifetime ISA.

Life events are limited to:

2017 to 2018 rule

During the tax year 2017 to 2018 only, any request to make a withdrawal from a Lifetime ISA will require the withdrawal of all funds held in the account and closure of the account. The account will then be treated as not being opened, which will enable investors to re-invest in another Lifetime ISA during 2017 to 2018 without breaching the one type of ISA a year rule.

No withdrawal charges will be applied during tax year 2017 to 2018 and no government bonus can be applied to any account closed during the tax year 2017 to 2018.

A withdrawal request made under this rule must be made to and accepted by the Lifetime ISA manager no later than 5 April 2018: even though funds may be physically withdrawn and the account closed after 5 April 2018.

This rule does not apply to accounts when an investor dies or evidence of the investor having a terminal illness has been provided to the ISA manager.

Removal of other sums not resulting in a withdrawal charge

Withdrawals or other removals of funds from a Lifetime ISA as a result of the following events will not be subject to a withdrawal charge:

  • removal of payments from an invalid account

  • fees charged by, and paid directly to, the ISA manager to manage the Lifetime ISA in accordance with its terms and conditions

  • when an ISA manager is declared in default by either the FCA or the Financial Services Compensation Scheme

  • an act or omission or circumstance not attributable to the account investor

  • recoupment and repayment of a government bonus to HMRC

ISA managers can ask for advice from HMRC when a withdrawal or removal of funds from an account is made in any of the circumstances above.

Amount of the withdrawal charge

The withdrawal charge is 25% of the total amount withdrawn from an account. This is deducted from the withdrawn amount by the ISA manager at the time that the withdrawal is made.

A withdrawal charge becomes due when funds withdrawn charge-free for a first time residential purchase on or after 6 April 2018 are not returned to the Lifetime ISA after the failure of that purchase (you can read failed first time residential purchase for more information). In these circumstances the withdrawal charge will be deducted from any funds remaining in the account.

The withdrawal charge in such cases is one third of the amount withdrawn. In example 3, the net amount withdrawn but not returned to the Lifetime ISA was £4,000, so the withdrawal charge due is £1,333.33 (one-third of £4,000).

Care must be taken by Lifetime ISA managers to correctly calculate and deduct the withdrawal charge from funds in an account.

See worked examples of withdrawal charges (PDF, 184KB, 1 page)

Notification and recovery of the withdrawal charge

From 6 April 2018, a withdrawal from a Lifetime ISA, and any withdrawal charges that are due, must be notified to HMRC by the Lifetime ISA manager on the monthly claim for the period in which the withdrawal occurred.

The withdrawal charge is treated as a tax charge. It must be paid into a non-ISA account, such as a control account, held by the ISA manager until it’s paid to HMRC.

Payment of withdrawal charges must be made to HMRC no later than 28 days after the end of the claim period during which the chargeable withdrawal occurred.

A claim period runs from the sixth day of a month to the fifth day of the next calendar month. Withdrawal charges deducted, or which should have been deducted, during this period are due and payable to HMRC by the 19th day of the month in which the claim period ended.

Where a chargeable withdrawal has been made but a withdrawal charge was not applied and HMRC subsequently decide it should have been applied, an amount equal to the withdrawal charge must be notified as due to HMRC.

When a withdrawal charge is due it’s the Lifetime ISA investor (or former investor as the case may be) and Lifetime ISA manager will be jointly and severally liable for the charge due.

A Lifetime ISA manager is jointly and severally liable in this regard to the extent that they hold funds in an investor’s account which are required to be used to cover the payment of the withdrawal charge due. This enables a Lifetime ISA manager to legally remove these funds from the investor’s account.

From 6 April 2018 government bonus claims and withdrawal charge notifications will be reported on a monthly basis to HMRC. More information is available on Lifetime ISA reporting.

When a withdrawal charge has been made an investor can make a written request to the ISA manager for a written statement giving details of the gross amount of the withdrawal, the amount of charge deducted and the net amount actually paid. The ISA manager must provide this statement within 30 days beginning with the day after receiving the written request from the investor.

Where an account investor considers that a withdrawal charge has been wrongly made, they can apply to HMRC for a refund of the charge within 4 years of the charge being made. This includes when a withdrawal charge was made:

  • after investors notify their LISA manager that they have a terminal illness

  • when funds in a Lifetime ISA were transferred to another Lifetime ISA

  • where funds have not been returned to a Lifetime ISA after the failure of a first time residential purchase

The ISA manager does not need to support or participate in the investor’s application to HMRC, who will notify the investor of its decision.

ISA managers cannot reverse a withdrawal charge that was wrongly made without an instruction from HMRC.

If an investor’s application is successful, either at the decision or review/appeal stage, HMRC may instruct the manager to reverse a withdrawal charge that they’ve applied and amend their Lifetime ISA claim for the month as appropriate.

Charges that remain due to HMRC but unpaid at the end of the period described above are collectable and recoverable as if they were tax charged by way of assessment.

Once the investor reaches 60

Funds within a Lifetime ISA, including the government bonus, can be withdrawn charge free from the Lifetime ISA once the investor has reached the age of 60, and can be used for any purpose.

Investors who are 60 can leave funds in their Lifetime ISA or transfer those funds to another ISA and any subsequent growth or interest earned will be tax free.

Death of the investor

Where a Lifetime ISA investor dies the account can be closed and funds can be withdrawn without incurring a withdrawal charge.

Where a Lifetime ISA investor died on or before 5 April 2018, the Lifetime ISA loses its ISA wrapper and cannot continue to benefit from the ISA tax advantages after the date of death of the investor.

The ISA manager can claim a government bonus accrued on payments made into the Lifetime ISA on or before the date of death of the investor. The bonus can be paid into the accounts of the estate.

No more subscriptions or payments can be accepted into the account after the date of death of the investor.

Where a Lifetime ISA investor died on or after 6 April 2018, the Lifetime ISA can remain open and can continue to benefit from the tax advantages until the account ceases to be a continuing account of a deceased investor.

The ISA manager can claim a government bonus accrued on payments made into the Lifetime ISA on or before the date of death of the investor and the bonus can be paid into the account.

No more subscriptions or payments may be accepted into the account after the date of death of the investor.

Any government bonuses claimed by a Lifetime ISA manager on subscriptions made after the date of death of the investor must be withdrawn from the account and repaid to HMRC.

The repayment of a government bonus claimed when the Lifetime ISA manager was unaware that the investor had died will not be subject to a withdrawal charge.

You can read more information on the inclusion of a government bonus in the calculation of additional permitted subscription limits.

You can also read a worked example of death of an investor (PDF, 86.3KB, 1 page) .

Terminal illness of a Lifetime ISA investor

When a Lifetime ISA investor is terminally ill and the Lifetime ISA manager has received written evidence from a UK registered medical practitioner (got to the General Medical Council website) that the investor has less than 12 months left to live, any subsequent withdrawals from the investor’s Lifetime ISA can be made without deducting a withdrawal charge.

A withdrawal in these circumstances does not require a closure of the Lifetime ISA. Managers, subject to the wishes of the investor, must keep the Lifetime ISA open and available to receive more payments from the investor.

Evidence from a UK registered medical practitioner proving that an investor has a terminal illness applies to the whole period in which the Lifetime ISA remains open, even if this is longer than the 12 month period set out in the written evidence provided by the investor.

When an investor is no longer a UK resident, confirmation of terminal illness from a UK registered medical practitioner or an overseas equivalent of a registered medical practitioner must be obtained.

Withdrawals for first time residential purchase

From 6 April 2018, charge-free withdrawals can be made when:

  • funds are withdrawn to be put towards the purchase price of a first time residential purchase in the UK by the investor (regardless of whether the purchase is made solely by the investor, jointly with another first time purchaser or jointly with another purchaser who is not a first time purchaser)

  • the purchase price of the residential property is £450,000 or less, the maximum purchase price of £450,000 is the same when the property is bought by one or more Lifetime ISA investor (read more about ownership and occupation)

  • the withdrawal (or in the case of an investor with more than one Lifetime ISA, the total withdrawals) is less than the purchase price of the residential property

  • the purchase is expected to be completed within 90 days of withdrawing funds from a Lifetime ISA (read more about conveyancer declaration)

  • the Lifetime ISA investor will live in the property

  • the property is purchased with a loan taken as a charge over the property for example a mortgage (excluding a ‘Buy to Let Mortgage’ – but read more on ownership and occupation)

  • it’s at least 12 months since the first payment was made by the investor into their Lifetime ISA from which the withdrawal is made

Ownership and occupation

Lifetime ISA investors can jointly buy a residential property with other purchasers, whether or not the other purchasers are also first time purchasers. There is no limit to the number of individuals who can purchase a single residential property.

Lifetime ISA investors can purchase as a joint owner with another person who may already own the property but again all the conditions set out above must be satisfied.

When more than one Lifetime ISA investor purchases a single residential property, taking advantage of the penalty free withdrawal for a first time purchase of a property, each must satisfy the conditions set out above, each must follow the process and the relevant information and declarations must be given by each purchaser.

The purchase must be of a legal interest in land. A purchase of residential property that does not include a ‘legal interest in land’ such as a houseboat is not included and a withdrawal charge will be made.

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.

When a partially completed dwelling is purchased that is not habitable, the Lifetime ISA investor must intend to occupy it as their only or main residence when construction has finished.

When a Lifetime ISA investor is not a UK resident but is a UK Crown employee serving overseas, or their spouse or civil partner is a UK Crown employee, the investor must have the intention to occupy the property as their only or main residence once able to do so . A UK Crown employee is allowed to let’ their property until such time as they return to the UK and can take up occupation.

Purchase price

The purchase price of a property is determined as follows:

  • other than in the situations described in the bullets below, the purchase price is the value required to be paid under the sale and purchase agreement entered into in connection with the acquisition of an interest in land, this does not include any separate consideration to purchase any fixtures and, or fittings

  • when an interest in land is acquired under a Regulated Home Purchase Plan, the value required to be paid to the original seller for the legal interest in that land, this does not include any separate consideration to purchase any fixtures and, or fittings

  • the acquisition of an interest in land by a Lifetime ISA investor jointly with another person who previously owned the land, the market value of the whole of the land at the time of the acquisition

  • in connection with the acquisition of a leasehold interest in land under a Shared Ownership Arrangement:

    • the value in accordance with the first bullet point in this section

    • the value of the premium required to be paid under the sale and purchase agreement entered into in connection with the acquisition of that interest, divided by the fraction representing the share of the property to be acquired on completion by the purchaser in return for the premium as described in the sale and purchase agreement or the lease

Withdrawal amount

No minimum amount applies to a withdrawal from a Lifetime ISA. Providing the relevant conditions are met for each withdrawal, there is no limit on the number of charge-free withdrawals that an investor can make for a first time residential purchase. For example:

  • the individual may have more than one Lifetime ISA

  • an individual makes several withdrawals between the initial deposit and completion of the property purchase

  • when there are unpaid government bonuses on the Lifetime ISA which the investor decides to use later in the purchase process, when they’ve been claimed by the ISA manager and paid by HMRC

Where more than one withdrawal is made to purchase a property, the process explained in investor declaration must be followed in full for each withdrawal made.

12 month rule

A charge-free withdrawal for a first time residential purchase can only be made from a Lifetime ISA that has been open for at least 12 months after the date of first payment into it. The 12 month period applies to each Lifetime ISA that an individual opens.

The 12 month rule applies to the date that an account was originally opened before it was transferred. Lifetime ISAs, or accounts opened for a defaulted Lifetime ISA payment or returned withdrawals following the failure of an earlier purchase.

See worked example of the 12 month rule (PDF, 99.1KB, 1 page)

Investor declaration

Charge free full or partial withdrawals for a first time residential purchase must be paid directly by the ISA manager to an eligible conveyancer on behalf of the investor. Before any withdrawal from a Lifetime ISA can be made, the investor must provide their conveyancer with the following information by way of a declaration:

  • the full or partial amount to be withdrawn (or aggregated amount if more than one Lifetime ISA)

  • details of the Lifetime ISA manager including name and address (incl. postcode)

  • the account number, or numbers, of the Lifetime ISA from which the withdrawal, or withdrawals, will be made

  • confirmation that they’re a first time buyer

  • full address and purchase price of the residential property

  • that the withdrawal will only be used to finance the purchase price of the property

  • that they’ve not claimed, a Help to Buy ISA government bonus for the same residential property purchase

  • the name and address of the seller’s conveyancer

  • that all the conditions for a charge free withdrawal in respect of a first time residential purchase are met, or, in the case of a purchase of land with a dwelling which is not yet habitable, when that will take place

The investor must provide their conveyancer with a declaration that the information so provided is true and complete to the best of their knowledge and belief.

For the avoidance of doubt, unless otherwise stated, the conveyancer described in this guidance is the investor’s purchasing conveyancer.

Withdrawals must be passed directly to the investor’s conveyancer by the ISA manager. Before allowing a withdrawal the ISA manager must obtain the following from the Lifetime ISA investor:

  • full details of their purchasing conveyancer

  • an instruction to pay the withdrawn amount directly to that conveyancer

Be aware that a Lifetime ISA investor cannot also be the purchasing conveyancer.

A model Lifetime ISA investor declaration template is available.

Conveyancer declaration

The Lifetime ISA manager will also need the conveyancer to provide the information set out below. The investor must tell their conveyancer to provide the information to the Lifetime ISA manager together with the investor’s declaration.

An eligible conveyancer is defined in:

  • England and Wales, as a conveyancer within the meaning of rule 217A of the Land Registration Rules 2003

  • Scotland, a solicitor or advocate within the meaning of section 65 of the Solicitors (Scotland) Act 1980, or a ‘conveyancing practitioner’ as defined in section 23 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990

  • Northern Ireland, a person enrolled as a solicitor of the Court of Judicature of Northern Ireland pursuant to the Solicitors (Northern Ireland) Order 1976

The investor’s conveyancer must declare to the ISA manager:

  • they’re an eligible conveyancer

  • they’ve received the information set out above from the investor, who has declared that it’s true and complete to the best of their knowledge

  • the purchase price of the property

  • the amount withdrawn will only be released to finance the purchase price of the property

  • that if the purchase does not proceed within 90 days of the date of receipt of funds by the conveyancer from the Lifetime ISA, the withdrawn amount will be returned in full directly to the ISA manager

  • details of the account into which the withdrawn funds will be paid

  • the conveyancer’s unique professional body registration number

  • that the information provided is true and complete to the best of the conveyancer’s knowledge and belief

It’s the responsibility of the Lifetime ISA investor to ensure this information is provided to their ISA manager by their conveyancer. ISA managers should bring this to the investor’s attention.

When the property purchase is continuing but is not expected to complete within 90 days of withdrawing funds from the Lifetime ISA the investor’s conveyancer can ask the ISA manager for a 60 day extension followed by a further 30 day extension if required.

ISA managers must report these extensions to HMRC using the digital API Lifetime ISA monthly reports.

A model Lifetime ISA conveyancer declaration template is available.

Upon receipt of conveyancer declaration

When ISA managers receive the conveyancer’s declaration they should, within 30 days of the date on which all the above information and confirmation is received, pay the withdrawn funds to the conveyancer without deducting a Lifetime ISA withdrawal charge.

An ISA manager who receives a completed declaration from an eligible conveyancer will not be required to take any additional steps to verify that the information is true and complete.

A charge-free withdrawal for a first time residential purchase should not be permitted if an ISA manager has any reason to believe the information provided in the declaration is untrue or incomplete. A manager must not authorise a charge-free withdrawal from a Lifetime ISA within 12 months of the first payment to that account or within 12 months of the initial payment to a Lifetime ISA that was transferred from another manager.

Completion of first residential purchase

Conveyancers must notify the ISA manager within 10 business days that the:

  • purchase has completed

  • purchase will not be completed within 90 days (or 150 days or 180 days if the relevant extensions have been applied for) of receipt of the withdrawn amounts by the conveyancer

  • house purchaser or seller has withdrawn from the purchase or sale of the property

Conveyancers must notify the ISA manager of the date of the purchase completion. If a purchase does not complete the conveyancer must:

  • notify the ISA manager that the purchase has not completed

  • return the withdrawn sums in full to the ISA manager, or provide an explanation for any shortfall in the amount repaid

  • notify the ISA manager of the investor’s name and address and account number of the Lifetime ISA from which the withdrawal was made

  • notify the ISA manager of his unique professional body registration number

Failed first time residential purchase

Where the house purchase falls through or does not complete within 90 days after the withdrawal, the amount withdrawn must be returned directly to the ISA manager by the conveyancer within 10 business days, unless the conveyancer has applied for a 60 day or a further 30 day extension period.

The amount returned to the ISA manager must be the same as the amount that was originally withdrawn and must be immediately repaid into the Lifetime ISA account.

If the amount returned to the ISA manager is less than the amount withdrawn any shortfall must be treated as a withdrawal and a withdrawal charge must be applied.

Any interest earned while the funds were held by the conveyancer can be paid directly to the investor and is not treated as a withdrawal charge - as it did not originate from the Lifetime ISA.

The Lifetime ISA manager must report the information provided by the conveyancer to HMRC using the API. If no information is received from the conveyancer by the due date that the investor’s first house purchase has been successful, no follow up action is required by the Lifetime ISA manager.

After the end of the tax year HMRC will contact Lifetime ISA managers for an update on withdrawals made for first residential purchases.

Where a Lifetime ISA manager reports to HMRC that following a failed house purchase the full amount withdrawn from the investor’s Lifetime ISA has not been returned to them by the due date HMRC will advise on any more steps that an ISA manager should take. This is likely to include the application of a withdrawal charge calculated on the funds not returned by the conveyancer.

If, after the withdrawal and closure of a Lifetime ISA, the house purchase fails, the withdrawn amount must be returned to the Lifetime ISA manager who held the Lifetime ISA. The amount must then be paid back into a Lifetime ISA account in the name of the account investor.

If necessary, a new account can be opened for the returned amount, even if the investor has also made payments to another Lifetime ISA in the same tax year. This applies whether or not the investor is resident in the UK.

Where the Lifetime ISA account has been transferred since the withdrawal the amount must be passed on to the new Lifetime ISA manager to be deposited in a Lifetime ISA in the name of the account investor.

Any withdrawn amounts which are not returned to be held in a Lifetime ISA in the name of the account investor, following a failed house purchase, will count as a withdrawal and may be subject to a withdrawal charge.

Closure of the Lifetime ISA

The ISA Regulations offer a 30 day right to cancel a Lifetime ISA. This differs from the FCA rules that offer a 14 or 30 day right to cancel depending upon whether an investment was sold at distance or non-distance retail.

When investors notify an ISA manager that they wish to cancel their Lifetime ISA agreement within 30 days of the applicable start date for the purpose of the FCA’s Conduct of Business Sourcebook (COBS), the account is disregarded for the purposes of the Lifetime ISA rules. No government bonus should be claimed and no withdrawal charge will apply in relation to the account. The account should not be reported to HMRC on the manager’s Lifetime ISA annual return.

Individuals who exercise their right to cancel their Lifetime ISA with an ISA manager within this 30 day period are exempt from UK income and capital gains tax on any income or gains arising from any payment made to the account.

Strictly individuals who withdraw their payments from an ISA by exercising their right to cancel their Lifetime ISA have made a current year payment to a Lifetime ISA. However, when payments are withdrawn and the account is closed within the closure period individuals are treated as though they’ve not opened and subscribed to the Lifetime ISA.

These rules apply only to a cancellation period following the opening of a Lifetime ISA, they do not apply to any further cancellation period which may be offered by a Lifetime ISA manager who accepts a transferred Lifetime ISA.

Where a Lifetime ISA agreement is cancelled within the 30 day closure period (described above) ISA managers must:

  • notify the individual that the withdrawn (or cancelled) payment does not count as a current year payment to a Lifetime ISA

  • close the Lifetime ISA

  • exclude the Lifetime ISA from any government bonus claims and annual return of information to HMRC

When a Lifetime ISA is closed after the statutory 30 day period, ISA managers must:

  • inform the investor that they cannot pay into another Lifetime ISA in the same tax year that they’ve made payments into the account that has been closed

  • treat the withdrawn funds as a withdrawal, and deduct any withdrawal charge that is due

  • confirm with the investor how to treat any unpaid government bonus after deduction of the 25% withdrawal charge in relation to the account

Where all of the Lifetime ISA funds in an account are withdrawn after the 30 day period, ISA managers and investors should be aware that it may still be necessary for sums to be paid into a Lifetime ISA account of the investor if a further withdrawal charge is to be avoided. These sums may include:

  • unclaimed and unpaid bonus amounts at the time of the withdrawal

  • withdrawn funds which must be returned to the Lifetime ISA following the failure of a first time residential purchase to complete within 90 days of the withdrawal

An ISA manager can offer the investor the opportunity to keep their Lifetime ISA open with a nil balance, or alternatively have arrangements in place that allow the reinstatement of the closed Lifetime ISA.

You can read more about closing an ISA.

ISA managers must report the closure of a Lifetime ISA when all funds are withdrawn to HMRC using the online API reporting function.

The report will need to include the:

  • ISA manager’s HMRC reference number

  • Lifetime ISA Account ID

  • closure reason

  • date of closure of the Lifetime ISA (this cannot be a date in the future)

Reporting on Lifetime ISAs

In addition to the other reporting instructions for ISA managers within this guidance, the following applies in respect of Lifetime ISAs.

A return of information will be required, for Lifetime ISAs, in a digital format as specified by HMRC. As with other ISA returns, a Lifetime ISA return that does not conform with HMRC’s requirements will be rejected. In which case, an ISA manager may be regarded as either having failed to make a return or as having made an incorrect return.

From the 6 April 2018 monthly bonus claim periods will cover the sixth day of one calendar month to the fifth day of the next calendar month and will be apply to qualifying payments made by investors during the claim period.

A bonus claim during the 2017 to 2018 tax year can only be made before 6 April 2018 when an ISA manager has received notification of the death or terminal illness of a Lifetime ISA investor.

Claims for a government bonus on qualifying payments made by investors during the 2017 to 2018 tax year must be made no later than 19 April 2018 (14 days following the end of the tax year).

The following ISA forms will include information on Lifetime ISAs:

  • annual return (ISA14) – the statements of income for both stocks and shares ISA and cash ISA must include Lifetime ISAs

  • annual return of statistical information (market value) (ISA14(Stats) and ISA14a(Stats)) – the valuations of both stocks and shares ISA and cash ISA must include Lifetime ISAs

  • annual return of statistical information (subscriptions) (ISA25(Stats) and ISA14a(Stats)) – the number of Lifetime ISAs to which subscriptions have been made in the year and the total amounts subscribed in the year to Lifetime ISAs must be reported

For the tax year 2017 to 2018 the information required will be from whichever is the latest of:

  • the date the manager began to manage ISAs

  • the last reporting date

Managers must report details for all Lifetime ISAs they managed during the return period, including those that have been transferred in, and those that have been closed. However, they should exclude details of those transferred out in full, made void, or closed within the period described.

ISA managers should continue to report cash ISAs, stocks and shares ISAs and innovative finance ISAs using the ISAComm100(OCR) even where they’re held for the same investor. Managers must continue to report details of each ISA separately.

For the tax year 2017 to 2018 the following account level information must be reported to HMRC.

ISA manager details

  • ISA manager reference number

  • ISA manager name

Claim period

  • tax year

  • claim period

Account details

  • Lifetime ISA account number

  • date of Lifetime ISA transfer (if applicable)

  • previous Lifetime ISA account number (if applicable)

  • date account was opened

  • date of first qualifying subscription

Investor details

  • investor Id number

  • full name (including title)

  • date of birth (and if relevant date of death)

  • National insurance number

  • full address and postcode

Qualifying addition details

  • amount of Help to Buy ISA transfer-in (PY Subs at 5 April 2017) (if applicable)

  • amount of other qualifying additions

  • total amount of qualifying additions

Bonus details

  • amount of bonus due for this period

  • total amount of bonus due for the tax year

  • bonus amount(s) already paid for the tax year

Additionally any amendments, corrections, review or appeal outcomes in relation to information previously reported, will need to be reported.

Monthly claims and annual returns from 6 April 2018 onwards, will not include details of qualifying additional Help to Buy balances at 5 April 2017 transferred in. Full API information is available for ISA mangers on the HMRC Developer Hub.

Reporting Process (API) 2017 to 2018

Real-time reporting is not mandatory during tax year 2017 to 2018. In order to make a claim during tax year 2017 to 2018 the following process will be required in respect of either the annual claim or for claims due to terminal illness or death of the Lifetime ISA investor.

Due to the sequential nature of calls required within the API, where a failure takes place during the call the remaining elements of that call will not progress. For example, during the API call to create the account (read more about creating an account) a failure in respect of the eligibility rules will mean that the checks against the compliance rules will not take place until such time as the eligibility rules have been passed successfully. Additionally, it means that calls must take place in a particular order. For example:

Create a LISA investor >Create or transfer a LISA account >Close existing LISA account >Report a life event >Request a bonus payment.

Create Investor ID

On receipt of a valid application and a valid current year payment, the Lifetime ISA manager will make a call to the Lifetime ISA API to create a ‘Lifetime ISA Investor ID’ (investor ID). Using the ‘Post’ Lifetime ISA Investor command the call to the API will require the Lifetime ISA investor details to be provided.

The Lifetime ISA ID will be specific to the individual and will not be changed on transfer. The investor ID will remain the same for each Lifetime ISA held by that individual.

Individuals are not expected to be advised of their investor ID.

HMRC will undertake identity checks at this point to ensure the details provided of the Lifetime ISA investor match its master records.

Where the identify checks are successful a success message, together with the investor ID, will be passed back through the API to the Lifetime ISA manager.

Where the call fails, a message relevant to the following failure reasons will be issued.

Please note that the codes may change following during development with users. Version changes will be communicated through the API developer hub. Additionally, depending on user software design, it may be the case that some of the error codes may not be visible for example error code 500, where the system is unavailable, may not be visible due to the fact the Lifetime ISA manager software may be designed to automatically re-send on receipt of this code.

Create Investor API messages

Error code Text This could be because Action to take
400 Bad Request Bad Request Request not recognised by API May be an issue with your software or data within the API call
403 Forbidden Investor not found Investor details do not match HMRC records LISA manager to check investor details inputted. If no errors made then advise investor to check personal details held by HMRC using their on-line personal tax account (PTA) via the Government Gateway. Investors can update their address and report changes to HMRC using their PTA.
404 Resource not found Not Found Requested resource does not exist Requested resource in your URL has not been found. Check URL to ensure its correct
406 Not Acceptable Accept Header Invalid API call has an invalid header within it Your software has sent a header which is not acceptable by the API - the header must be amended
409 Conflict Investor already exists This is not an error message as such but a success message advising that the investor ID already exists None - you should receive the Investor ID in the returned message
500 Internal Server Error Internal Server Error This means that HMRC systems are currently unavailable Retry the API call again after a short while (unless it’s pre-planned HMRC downtime)

Create account

Once the Investor ID is created the next part of the user journey will be to create the account. Using the ‘Post’ Lifetime ISA Account command, the call to the API will require Lifetime ISA account details to be provided. At this point in the journey the call will need to refer to the investor ID.

On matching against the Investor ID, HMRC will undertake eligibility and compliance checks at this point to ensure the details provided comply with Lifetime ISA and ISA rules such as the age requirements and the 1 ISA type per tax year rule.

The eligibility check and compliance checks will be undertaken in successive order. This means that if the eligibility check fails the API will issue an error message and the compliance checks will not be undertaken at that time. Once the whole create account process has been completed successfully a success message confirming the account has been opened be passed back through the API to the Lifetime ISA manager.

Where the call fails, a message relevant to the following failure reasons will be issued.

Please note that the codes may change following during development with users. Version changes will be communicated through the API developer hub. Additionally, depending on user software design, it may be the case that some of the error codes may not be visible for example error code 500, where the system is unavailable, may not be visible due to the fact the Lifetime ISA manager software may be designed to automatically re-send on receipt of this code.

Create account API messages (also includes messages for account creation on transfer and account closure)

Error code Text This could be because Action to take
400 Bad Request Bad Request Request not recognised by API May be an issue with your software or data within the API call
403 Forbidden Investor not found Investor ID does not match NINO LISA manager to check details input and correct before re-submitting
403 Forbidden Wrong Lifetime ISA manager ISA manager reference number does not match HMRC records LISA manager to check details input and correct before re-submitting
403 Forbidden Investor eligibility check failed Investor not eligible for Lifetime ISA account LISA manager to check details input and correct before re-submitting or advising investor that they’re not eligible to open a Lifetime ISA
403 Forbidden Investor compliance check failed Investor failed a compliance check, for example HMRC records show that the investor has an open and active Lifetime ISA already HMRC records show that the investor has an open and active Lifetime ISA already. When investors inform their ISA manager that they believe that they’re eligible to have their LISA, managers should send an e-mail enquiry to HMRC at: savings.audit@hmrc.gsi.gov.uk. HMRC will then investigate what has caused the investor to fail the compliance check.
403 Forbidden Previous Lifetime ISA investor account does not exist The ‘transferred from account’ details do not match with an account already held for this investor ID LISA manager to heck details input and correct before re-submitting. This may require the receiving Lifetime ISA manager contacting the ceding Lifetime ISA manager in order to check and amend previous account details
403 Forbidden Previous Lifetime ISA investor account does not exist The ‘transferred from account’ details and, or transferred in date are missing and are required to transfer in the account Data in the API call indicates this is a transfer of a Lifetime ISA. LISA manager to check data input is complete and correct and complete before re-submitting
403 Forbidden Lifetime ISA investor account already closed This is not an error message as such but a message advising the Lifetime ISA investor account is already closed No further action is required
404 Resource not found Not Found Requested resource does not exist Requested resource in your URL has not been found. Check URL to ensure its correct
406 Not Acceptable Accept Header Invalid API call has an invalid header within it Your software has sent a header which is not acceptable by the API - the header must be amended
409 Conflict Lifetime ISA investor account already exists This is not an error message as such but a message advising that the account ID already exists None – it simply advises that the account has already been created: suggesting duplication by the Lifetime ISA manager in respect of which they must check their internal processes to ensure duplicate calls are not made
500 Internal Server Error Internal Server Error This means that HMRC systems are currently unavailable Retry the API call again after a short while (unless it’s pre-planned HMRC downtime)

Create account on transfer

Once the Investor ID and the Lifetime ISA investor account are created the account may then be transferred-in by the receiving manager. As a result of a successful call to the API in order to transfer in an existing Lifetime ISA, the account that has been subject to the transfer will be closed automatically to enable the new account to be the only active account.

The call to the API will require Lifetime ISA account details of the account held by the ceding manager and account details of the account being created by the receiving manager. The call must not be made until all the transfer in process has completed.

Only once the process has been completed successfully will a success message, confirming the account has been opened on transfer, be passed back through the API to the Lifetime ISA manager. The table above also contains the relevant details of messages issued in respect of failed calls.

Read more guidance on transferring Lifetime ISAs and transferring ISAs.

It should be noted that, due to the operation of the 2017 to 2018 rule during that tax year, under the normal course of events, the transfer in call made within the API will not always be required. This is because the ceding Lifetime ISA manager may not have already made the’ create investor ID’ and ‘create investor account’ calls via the API on the basis no life event requiring an in-year bonus claim may be relevant. The receiving manager may then proceed to make the appropriate calls within the API to create the Lifetime ISA investor ID as and when necessary.

If the receiving Lifetime ISA manager fails to note the circumstances set out above, and seeks to make a ‘transfer in’ call within the API, the call will fail as no Lifetime ISA with the ceding manager will not be traceable through the API.

Create life event

Where the Lifetime ISA investor has died or has provided suitable evidence that they’re terminally ill with a prognosis of 12 months or less to live, the Lifetime ISA manager must make a call to the API to create a suitable life event. In 2017 to 2018 a life event will be limited to death or terminal illness.

The call to the API will use a ‘Post’ Life Event command, requiring Lifetime ISA account details to be provided including account number and investor ID which will be verified within the API against HMRC records.

Provided the life event is not already registered or is not inappropriate a success message, confirming the creation of the reported life event, will be passed back through the API to the Lifetime ISA manager.

Where the call fails, a message relevant the following failure reasons will be issued.

Please note that the codes may change following during development with users. Version changes will be communicated through the API developer hub. Additionally, depending on user software design, it may be the case that some of the error codes may not be visible for example error code 500, where the system is unavailable, may not be visible due to the fact the Lifetime ISA manager software may be designed to automatically re-send on receipt of this code.

Create Life Event API messages

Error code Text This could be because Action to take
400 Bad Request Bad Request Request not recognised by API May be an issue with your software or data within the API call
403 Forbidden Wrong Lifetime ISA manager ISA manager reference number does not match HMRC records LISA manager to check details input and correct before re-submitting
403 Forbidden Life event inappropriate Life event conflicts with previous life event reported Life events must be reported only once for each Lifetime ISA and only in the correct order (for example. terminal illness > death)
403 Forbidden Life event already exists Investor’s life event already exists for this Lifetime ISA Life events must be reported only once for each Lifetime ISA and only in the correct order (for example. terminal illness > death)
500 Internal Server Error Internal Server Error This means that HMRC systems are currently unavailable Retry the API call again after a short while (unless it’s pre-planned HMRC downtime)

Where a life event for terminal illness has been created it will have application only to the specific Lifetime ISA account and Lifetime ISA manager in respect of which the API call was made. Consequently, if the account is later transferred, the Lifetime ISA investor will be required to re-notify the new Lifetime ISA manager providing evidence supporting his diagnosis of terminal illness and prognosis of life expectancy. The evidence is required to be current to the notification then being made.

The Lifetime ISA manager will then make a call to the API to create a suitable life event (see also terminal illness).

Create government bonus claim linked to life event

Having successfully undertaken the life event call to the API, the Lifetime ISA manager will then be able to make a claim(s) for the government bonus to be paid for that Lifetime ISA investor. The claim must be made in respect of a claim period and should be made by the relevant due date for that claim period.

The call to the API will necessitate a ‘Post’ Lifetime ISA Transaction command, requiring Lifetime ISA account details to be provided including account number and investor ID which will be verified within the API against HMRC records. The API will also undertake verification checks to link the claim for the government bonus to an existing life event.

The Lifetime ISA manager will also be required to submit relevant financial data to support the bonus claim. Where the data meets policy requirements (for example. the bonus claimed is mathematically correct and, in aggregate with other bonus claims which may have been received in the tax year, does not exceed the maximum limit) a success message, confirming the bonus, will be passed back through the API to the Lifetime ISA manager.

Where the call is made successfully but the information submitted indicates a late notification by the Lifetime ISA manager, a message warning that the notification has been received late will be issued via the API. Additionally, a separate success message, confirming the successful claim, will be passed back through the API to the Lifetime ISA manager.

Where the call fails, a message relevant to the following failure reasons will be issued.

Please note that the codes may change following during development with users. Version changes will be communicated through the API developer hub. Additionally, depending on user software design, it may be the case that some of the error codes may not be visible for example error code 500, where the system is unavailable, may not be visible due to the fact the Lifetime ISA manager software may be designed to automatically re-send on receipt of this code.

Create government bonus claim API messages

Error code Text This could be because Action to take
400 Bad Request Bad Request Request not recognised by API May be an issue with your software or data within the API call
403 Forbidden Wrong Lifetime ISA manager ISA manager reference number does not match HMRC records LISA manager to check details input and correct before re-submitting
403 Forbidden Life Event does not exist Government bonus claim has been submitted in respect of death or terminal illness without a suitable life event having been reported first Claims for a government bonus relevant to a claim period ending on or before 5 March 2018 may only be made where an associated life event has first been successfully created. Bonus claims not related to a life event may be created on or after 6 March 2018
403 Forbidden Investor account is void or closed The Lifetime ISA investor account is either void or has been closed prior to the claim LISA manager to check details input and correct before re-submitting. The Lifetime ISA manager should first check data which may have been received in respect of void and closed accounts and if still required they may contact SSO to seek guidance on how to proceed. Lifetime ISA may be voided where it comes to HMRCs attention that the account was not opened in accordance with the eligibility or compliance rules
403 Forbidden Bonus claim error 1. Bonus requested exceeds, or as a result of the claim the aggregate of bonuses claimed, the maximum limit: or 2. bonus claimed does not satisfy mathematical rules when applied to stated qualifying payments made in the claim period LISA manager to check details input against the policy rules in respect of the following matters prior to re-submitting the claim:

Maximum qualifying additions during 2017 to 2018
Maximum bonus limit for 2017 to 2018
Ensuring claim is 25% of the qualifying additions being reported
404 Resource not found Investor account ID not found Account ID given does not match with HMRC records Lifetime ISA manager to check investor account ID
404 Forbidden Not found Requested resource does not exist Requested resource in your URL has not been found. Check URL to ensure it’s correct
406 Not Acceptable Accept Header Invalid API call has an invalid header within it Your software has sent a header which is not acceptable by the API - the header must be amended
500 Internal Server Error Internal Server Error This means that HMRC systems are currently unavailable Retry the API call again after a short while (unless it’s pre-planned HMRC downtime)

Close account

Where the Lifetime ISA manager wishes to notify HMRC that the account has been closed he must make a call to the API using a ‘Put’ account command. If successful the Lifetime ISA will be updated with a ‘closed’ status and will show the reason for the account closure.

The call to the API will require Lifetime ISA account details to be provided including account number and investor ID which will be verified within the API against HMRC records.

Where appropriate a success message, confirming closure of the account will be passed back through the API to the Lifetime ISA manager.

Where the call fails, a message relevant to the failure reasons contained within the table within create account will be issued.

It should be noted that, during tax year 2017 to 2018, due to the operation of the 2017 to 2018 rule and the fact that real-time reporting has not been mandated, it will not be necessary to notify HMRC that a Lifetime ISA has been closed, following investor withdrawal of funds, where the account creation call has not yet taken place.

However, where the account creation call within the API has taken place and the account is closed due to the operation of the 2017 to 2018 rule, notification of its subsequent closure will be required to enable the investor to open another Lifetime ISA within the same tax year.

Closures due to death or terminal illness will first require account creation calls within the API in order to claim and receive the government bonus.

Appeal rights

When an error made by a Lifetime ISA manager or an investor has prevented a government bonus being paid or a withdrawal charge has occurred investors do not have a right of appeal to HMRC.

When investors receive notification from HMRC rejecting a government bonus claim or imposing a withdrawal charge, they have a right to appeal or to ask HMRC to review a decision or notification by HMRC in respect of:

  • rejection of a government bonus claim

  • recoupment of a government bonus

  • withdrawal charges

  • withdrawal charges made when there is a shortfall in funds returned to an ISA manager following a failed first time residential purchase

Notification of any appeal or request for a review must be given to HMRC within 30 days after the date the decision or notification was given by HMRC. The notification of the appeal:

  • must be in writing

  • specify the grounds of appeal

  • provide sufficient information to identify the appellant and the decision against which the appeal is being made

  • must be signed, or authenticated in another way approved by HMRC, by or on behalf of the appellant

Send appeals to:

HM Revenue and Customs
BX9 1BU

Examples of forms for first time residential purchases

Published 5 April 2018
Last updated 31 July 2018 + show all updates
  1. Guidance under heading ISA managers has been updated.
  2. A link to the new Lifetime ISA manager application service has been added.
  3. Guidance on your appeal rights has been updated.
  4. First published.