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FAQ / Savings questions

Cash Lifetime ISA


Am I eligible for Lifetime ISA?

Who is eligible for a Cash LISA?

You must be 18 or over but under 40 years old when you open and make the initial deposit to your Cash Lifetime ISA. (Unless you are transferring an existing Lifetime ISA from another provider).

You are looking to use your Cash Lifetime ISA towards the purchase of your first home or towards your retirement.

You must be a UK resident, unless you or your spouse/civil partner is serving overseas for the UK Crown.

You’ll need to make your initial deposit or transfer your existing LISA within 28 days of your application.

What if I’m between 40 – 49 years old?

You can’t open a new Lifetime ISA, but you can transfer your existing one.

Additional deposits are allowed, you’ll keep earning the government bonuses and interest on your balance.

What if I’m between 50 – 59 years old?

You can’t open a new Lifetime ISA, but you can transfer your existing one.

Additional deposits aren’t allowed, you won’t earn the government bonus, but you’ll keep earning interest on your balance.

What if I’m over 60?

You can’t open a new Lifetime ISA, but you can transfer your existing one.

Additional deposits aren’t allowed, and you won’t earn the government bonus. But you’ll keep earning interest on your balance and have unlimited access to your LISA funds.

 

Depositing into your Lifetime ISA

How much can I deposit into a LISA?

You can save up to £4,000 tax-free each tax year, this is your annual Lifetime ISA allowance and counts towards you annual ISA allowance of £20,000.

The government will pay you a 25% bonus on your contributions, this means you can earn up to an extra £1,000 each tax year

How do I make a deposit into my LISA?

You can make deposits from your nominated bank account by either electronic bank transfer or cheque.

Remember - we will always ask you to use these details when making a deposit. If you’re ever asked to use different details do not send any money and contact us immediately.

Electronic bank transfers

Sort code: 40-02-50
(This may show up as HSBC, we only use them as our clearing bank)

Account number: 31344897

Payee: Paragon Bank PLC

Payment reference: Your Paragon account number or application reference number.

Cheque

Please make your cheque payable to:

Paragon Bank Re your name and savings account number/application reference number.

And send freepost to:

RTEX-LLUT-KKKE, Paragon, PO Box 850, Wallsend NE28 5BJ




Important information:

  • When you enter the sort code it may show as a HSBC Bank PLC account because we use them as our clearing bank.
  • It’s important to use a payee when depositing funds electronically, it protects you and makes sure you’re sending your money to the right person. When sending deposits to us please use the payee name Paragon Bank PLC, it’ll help ‘match’ the account you’re sending money to and the name associated with that account. If you get a ‘no match’ or ‘unavailable’ message please make sure you’re quoting the right account number, sort code and Paragon Bank PLC as the payee, you should then get a ‘match’ message from your bank or building society.
  • Your payment reference makes sure we’re able to identify and apply your deposit to your Paragon account, without it we might have to return your funds or delay funding your account.
  • If you have entered the sort code, payee and payment reference correctly, and still see a ‘no match’ or ‘unavailable’ message, please contact your bank or building society.

We will credit cheques to your account on the day we receive them, although it can take up to three days to clear the banking system. You’ll start to earn interest from the second business day after we receive your cheque.

How will I know you’ve received my deposit?

How long it takes for an electronic bank transfer to reach us will depend on your bank or building society. ​We will contact you when your funds have been credited to your account.

We will credit any money you deposit by Electronic Transfer or by transfer from another Paragon Account on the same day we receive it. We will contact you to confirm once we have received it. You should then be able to make a withdrawal on the same day, unless your Product Terms and Conditions do not allow it.

If we receive your deposit after 4pm (our transfer-in deadline) then your account will be credited the next day. If the funds reach us after 4pm, we will contact you when they have been applied.

If we are unable to credit funds to your account (for example if funds have been sent from an account other than your nominated bank account) and your funds are rejected, we will contact you and confirm they were rejected.

If funds are sent before 4pm and rejected, we will contact you to confirm the next business day. Rejected funds sent after 4pm will be returned the next business day and we’ll contact you the following business day.

What happens if I go over my Lifetime ISA allowance?

If you make a deposit that takes you over your annual Lifetime ISA allowance we will return that whole deposit.

You can make a new deposit as long as it doesn't take you over your annual allowance.

Remember your Lifetime ISA allowance is part of your overall annual ISA allowance.

How does the ISA Wallet work with LISAs

Our ISA Wallet allows you to spread your tax-free ISA allowance across multiple ISAs with Paragon.

Your annual LISA allowance is part of your annual ISA allowance. So, you can spread your remaining ISA allowance across our ISA range.

Is the Lifetime ISA flexible?

No, the Lifetime ISA is not flexible. So, any funds you withdraw are not only potentially subject to the 25% government withdrawal charge but also can’t be replaced in the same tax year without using your LISA allowance.

Can I pay into both a Help to Buy ISA and a Lifetime ISA and will I get the bonus on both if I do this?

You can pay into a Lifetime ISA and a Help to Buy ISA at the same time, but you can only use the government bonus from one towards the purchase of your first home.

Can I have more than one Lifetime ISA?

You can have more than one LISA but only pay into one in any tax year, up to the annual Lifetime ISA allowance.

 

Withdrawing from your Lifetime ISA

How do I withdraw funds from my Lifetime ISA?

You can’t withdraw from your LISA charge free in the first 12 months after your initial deposit. If you do, even if it’s for your first home your withdrawal is subject to the 25% government withdrawal charge.

But if you’ve held a LISA with another provider for more than 12 months and have transferred it to Paragon you can access your funds charge free for your home purchase or retirement.

If you make a withdrawal that is not connected to your first home or retirement, the government withdrawal charge will apply. The government withdrawal charge is applied to the amount you withdraw.

You could end up with less than you invested.

What is the government withdrawal charge?

The government will charge you 25% of any amount you withdraw. The government withdrawal charge will not apply:

  • If you use your Cash Lifetime ISA to buy your first home
  • After you’re 60 years old
  • If you die or are diagnosed with a terminal illness and are expected to have less than 12 months to live.

If you withdraw your funds for any other reason you will incur the government withdrawal charge on the amount you withdraw. This means you could end up withdrawing less than you invested.

 

Using your LISA funds for your first home or retirement

Can I use a LISA for the purchase of my first home?

To use your LISA to purchase your first home you must meet the following criteria:

  • You must be a UK resident
  • You have never previously owned a property in the UK or abroad
  • The property you purchase is in the UK and costs less than £450,000
  • You made your first deposit into a Lifetime ISA at least 12 months before instructing your conveyancer
  • The property is purchased through a residential mortgage
  • It will be your main residence immediately on completion.

When you come to purchase your first property you will need to tell your conveyancer you want to use all or part of your Lifetime ISA towards the purchase and provide them with a completed Investor declaration form

Your conveyancer also must also complete and provide us with a Conveyancer declaration form

Once we receive both declarations from your conveyancer, we will pay the amount requested directly to your conveyancer within 30 days.

You can make more than one withdrawal in relation to your house purchase. No minimum amount will apply to these withdrawals.

If you don’t use all your Lifetime ISA savings for the purchase of your first home your LISA will remain open as normal. However, the remaining amount can only be used towards retirement.

To find out more about withdrawing your LISA funds for the purchase of your first home you can find all the information in our Guide to your Cash Lifetime ISA

What happens if my house purchase takes longer than expected?

The conveyancer has 90 days from receiving the funds from us to complete the purchase. If it's taking longer than 90 days, the conveyancer can write to us to request an extension.

For more information on applying for an extension please see our Guide to your Cash Lifetime ISA

What happens if my house purchase falls through?

The conveyancer must return the funds within 10 working days of the house purchase falling through and the funds are to be paid back in to your account.

If the withdrawal had closed the account it will be reopened when the funds are returned and your interest will not be backdated.

If the conveyancer returns less than the amount withdrawn, or doesn’t return the funds at all, you will incur the government withdrawal charge.

For more information please see our Guide to your Cash Lifetime ISA

To withdraw your LISA for retirement

You have unlimited charge free access to your LISA fund after your 60th birthday. To access your money, simply log in and follow the on screen instructions. Your funds will be sent to your nominated bank account.

If you don’t want to retire until after 60, this won't affect your Lifetime ISA. It simply means you'll have access to the money from aged 60.

 

Transferring a Lifetime ISA

Can I transfer funds from my Lifetime ISA into another ISA?

If you transfer out of your Lifetime ISA into a different type of ISA (Cash ISA or Stocks & Shares ISA) the transfer will be subject to the government withdrawal charge. This means you’ll get back less than you paid in.

You can transfer your Lifetime ISA into another Lifetime ISA without incurring the government withdrawal penalty.

You can find information on how to transfer your LISA in a Guide to your Cash Lifetime ISA

How do I transfer my LISA?

Transfer your existing LISA to Paragon

If you want to transfer your existing LISA to Paragon charge-free.

Simply select ‘Transfer LISA’ on our Cash Lifetime ISA page. After completing your online LISA application, you will need to complete and send us a Lifetime ISA Transfer Form

If you send funds before the LISA transfer has been completed, we will hold them and credit them to your account once the transfer has cleared. You will not earn interest on these funds until they have been applied to your cash LISA.

Transferring your Paragon LISA to another provider

To transfer your Paragon LISA without incurring the government withdrawal charge you’ll need to initiate the transfer through your new provider, and we will transfer directly to them.

You will lose the tax-free ISA status, and potentially incur the government withdrawal charge on any funds you withdraw, without going through a LISA transfer.

 

Can I cancel my LISA?

You have the right to cancel your account within 30 days from the date we received your opening deposit.

You can cancel your LISA by logging into your account and sending us a secure message. Alternatively, you can write to us at: RTEX-LLUT-KKKE, Paragon, PO Box 850, Wallsend NE28 5BJ

Your cancelled ISA won’t count as a Lifetime ISA subscription and 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 this period.

 

When will the government bonus be paid to my account?

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

It will be paid into your LISA within 4 – 9 weeks of us receiving your deposit.

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Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551