Guidance

Close a Lifetime ISA if you're a Lifetime ISA manager

Find out what to do when investors want to close or cancel their Lifetime ISA.

When a Lifetime ISA can be cancelled

The ISA Regulations give investors 30 days to cancel their Lifetime ISA.

When investors inform you that they wish to cancel their Lifetime ISA agreement within 30 days of the applicable start date, the account is treated as never having been a Lifetime ISA.

What you’ll need to do

If an investor cancels their Lifetime ISA within 30 days

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  • notify the individual that the withdrawn (or cancelled) payment does not count as a current year payment to a Lifetime ISA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

These rules apply during the cancellation period following the opening of a Lifetime ISA. They do not apply to any further cancellation period offered by a Lifetime ISA manager who accepts a transferred Lifetime ISA.

If an investor closes their Lifetime ISA after 30 days

You must:

  • inform the investor that they cannot pay into another Lifetime ISA in the same tax year that they’ve made payments into the closed account
  • deduct the 25% withdrawal charge from the funds withdrawn
  • explain to the investor that any unpaid government bonus will be paid after deduction of the 25% withdrawal charge from the account

Where an investor withdraws all the funds in their Lifetime ISA after the 30 day period, they need to be aware that they may need to keep their Lifetime ISA account open to accept further payments.

These may include:

  • unclaimed and unpaid bonus amounts at the time of the withdrawal
  • funds being returned to the Lifetime ISA following the failure of a first time residential purchase

You can offer the investor the opportunity to keep their Lifetime ISA open with a nil balance, or alternatively have a process that enables a closed Lifetime ISA to be reinstated.

After closing a Lifetime ISA

You must report the closure of a Lifetime ISA to HMRC using the online Application Programming Interface reporting function.

Read more about closing an ISA.

Updates to this page

Published 12 March 2020
Last updated 15 May 2020 + show all updates
  1. The Lifetime ISA withdrawal charge has been reduced.

  2. First published.

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