When is the LISA bonus paid?

What is the bonus on Lifetime ISA?

The bonus on a Lifetime ISA is 25% of whatever you contribute, so for every £4 you save, you’ll get £1 from the government for free. You can pay up to £4,000 a year into your LISA — max out your account and the government will give you up to £1,000 each year towards your house deposit or retirement. The maximum bonus is £33,000, but to get this much help, you’d need to open your Lifetime ISA at 18 and max it out every year until the age of 50.

When you turn 50, you’ll no longer be able to contribute to your Lifetime ISA and you won’t receive more bonuses, but your account will stay open and you’ll continue to earn interest (or investment returns, if you have a Stocks & Shares LISA).

To learn more, take a look at our guide on how to open a Lifetime ISA.

How do I claim my LISA bonus?

You don’t need to do anything to claim your LISA bonus, because your provider will claim it from HMRC on your behalf. This will automatically be paid into your account every 4-6 weeks, so your bonus can land in your account the month after depending on when you paid it in.

When you’re ready to buy a home, you’ll need to instruct your conveyancer to access your LISA savings on your behalf. Your provider will require you to complete a declaration form, as well as your conveyancer in order for the funds to be paid out. With a Tembo Lifetime ISA, we will pay the requested amount within 30 days of receiving the declarations from you and your conveyancer.

Learn more: Best Lifetime ISA providers in the UK

Do you get a 25% bonus every year for a LISA?

You could get a 25% bonus every year from the age of 18 up until you’re 50, but you’ll only get the bonus during the years that you contribute - up to £1,000. If you go a full tax year without making any LISA contributions, you won’t get a 25% bonus that year. You also won’t be able to make the most of your £4,000 annual LISA allowance once that tax year is over. 

Find out all about Lifetime ISAs and the tax year here.

When is the Lifetime ISA bonus paid?

The Lifetime ISA bonus is paid at the end of each month, but it can sometimes take between 4-6 weeks for the money to reach your account. The length of time you’ll have to wait will depend on the date you make a deposit. We have a monthly claim period running from the 6th of each month to the 5th of the following month, with the bonus for that period being paid by the government at the end of the 2nd month.

What happens if my bonus doesn’t arrive before my completion date?

If your bonus doesn’t arrive until after your completion date, the outstanding bonus won’t be factored into your property purchase. You could still use your LISA savings and any previous bonuses to buy your first home, then use the remaining bonus towards your retirement. If you want your savings out sooner, you would need to ask for a withdrawal and will need to pay the penalty.

If you’re due to complete a property purchase just a few days after the bonus is paid, your LISA provider may be able to withdraw it just in time to send the funds to your solicitor. Here at Tembo, it can typically take up to 3 working days to withdraw money from our Cash LISA or up to 10 working days for our Stocks & Shares LISA.

For this reason we’d recommend telling us about your upcoming purchase as soon as the ball is rolling - we’ll be able to give you personalised information about any pending bonuses and the impact that could have on your house purchase!  

Learn more: Lifetime ISA vs Help to Buy ISA

Can I put £4,000 straight into a Lifetime ISA?

You can put £4,000 straight into your Lifetime ISA or transfer the money into your LISA over the course of each tax year at your own pace. 

With a Tembo Lifetime ISA, you can automate your payments by setting up a monthly direct debit so you can start saving for a house on auto-pilot. You can then manage your direct debit within the app, changing, pausing, or cancelling your contributions to suit your budget and goals. Or you can use one-off payments aka top-ups. It’s up to you! The same goes for if you’re using your gift link - family or friends can add from £10 to whatever you’ve got left of your allowance.

What is the 12 month rule for a Lifetime ISA?

To use the money within your LISA to buy your first home (without paying the 25% penalty), you’ll need to have held your account for at least 12 months and have a balance of at least £1. If you transfer a LISA from one provider to another, the 12-month period doesn’t change - it remains as 12 months from the date you made your first payment into the LISA you held previously.

Transfer your LISA to Tembo to access our market-leading 4.75% interest rate*.  

If you’re thinking of opening a LISA for the first time, it’s a good idea to consider when you want to buy a property. Happy to wait a year? A Lifetime ISA could be a no-brainer, as long as you’re buying an eligible home worth less than £450,000 in the UK that’s your first ever home, is for you to live in (aka not a buy-to-let) and you’re going to be buying it with a mortgage. 

If you think you might buy a home one day but you’re not sure when, you could open a Lifetime ISA with just £1 to get the clock ticking. You don’t need to max out your LISA every year and you can pause or cancel contributions anytime if you wish, but simply having the account could inspire you to save — especially since the government will boost your savings by 25% and you’ll earn interest on the total amount in your LISA. 

If, however, you want to collect the keys to your first home in the next few months, a Lifetime ISA might not be right for you.

How to earn a £3,000 LISA bonus in a year and two days

It may be possible to earn a £3,000 LISA bonus in just one year and two days, particularly if you’ve been saving for a while or your family are in a position to help you save. While you can earn it this fast, remember that the money needs to land in your account before the 6th of April to get the government bonus for that tax year, so it's sensible to add on a few weeks to make sure the contributions land in your account in time.

Here’s how to earn £3,000 in LISA bonuses in 3 easy steps:

1. Open a LISA on the 4th April and contribute the full £4,000. You’ll recieve a £1,000 bonus from the government.
2. You could add another £4,000 just two days later when the new tax year begins on 6th April. You’ll earn another £1,000 government boost.
3. You could add a further £4,000 just 12 months later from the 6th of April in the following tax year, resulting in yet another £1,000 top-up from the government. 

In just over a year you’d have contributed £12,000 to your Lifetime ISA and you’d have earned £3,000 from the government (but don’t expect each bonus to appear in your LISA straight away). 

As satisfying as it would be to boost your savings this quickly, there’s little point in delaying opening an account if you’ve already missed the end of the tax year. The sooner you open your LISA, the sooner you can start earning interest (if it’s a cash Lifetime ISA).