Introduction
If you’re saving for your first home or retirement, the Lifetime ISA (LISA) can be one of the most rewarding options available — especially with the 25% government bonus. But what if you already have money saved in a Cash ISA or Stocks & Shares ISA?
Good news: you can transfer existing ISA funds into a LISA – but it’s important to do it correctly to avoid losing tax benefits or triggering penalties. Here’s how to make the transfer safely and effectively.
1. Check Your Eligibility for a Lifetime ISA
Before transferring any money, make sure you’re eligible to open or hold a LISA:
- Age: You must be aged 18–39 to open one.
- Contribution limit: You can pay in up to £4,000 per tax year, including transfers.
- Bonus: The government adds 25%, up to £1,000 per year.
If you’re over 40 or have already reached the £4,000 limit this tax year, you’ll need to wait until the next tax year to move more money in.
2. Understand How ISA Transfers Work
ISA transfers are not the same as withdrawing money and reinvesting it.
If you withdraw funds yourself and then pay them into a LISA, the transfer will:
- Count as a new contribution (and be limited by the £4,000 annual cap)
- Lose its ISA tax-free status during the transfer period
- Potentially reduce your bonus eligibility
To keep your tax-free benefits intact, always request the transfer through your new LISA provider, not by withdrawing the cash yourself.
3. Choose a LISA Provider That Accepts Transfers
Not all LISA providers allow incoming transfers, so you’ll need to:
- Compare providers – Look for ones that accept transfers from other ISAs.
- Decide between Cash or Stocks & Shares LISA – depending on your goals and risk tolerance.
- Check for transfer fees – Some providers or investment platforms may charge for outgoing or incoming transfers.
Common providers that often accept transfers include AJ Bell, Moneybox, Skipton Building Society, and Nottingham Building Society, but always double-check their latest terms.
4. Complete the Transfer Form
Once you’ve chosen your new provider, they’ll guide you through the process. Usually, you’ll fill in a transfer authority form, providing:
- Details of your existing ISA provider
- The account number
- Whether you want to transfer all or part of the balance
You’ll then leave the rest to your new provider – never withdraw the money yourself.
5. Know the Transfer Limits and Rules
Here’s how transfers count toward your LISA allowance:
- ISA money from previous tax years: You can transfer as much as you like – but only £4,000 of it will count toward your current LISA allowance each tax year.
- ISA money from the current tax year: If transferring funds you’ve already contributed this year, that amount will count toward your £4,000 LISA limit too.
Example:
If you transfer £10,000 from a Cash ISA you built up in previous years, only £4,000 of it can go into your LISA this year. The remaining £6,000 will stay in your old ISA or can be moved to a standard ISA instead.
6. Wait for the Transfer to Complete
Transfers typically take:
- Up to 15 days for a Cash ISA → Cash LISA
- Up to 30 days for a Stocks & Shares ISA → LISA
During this time, your funds are usually not invested, so be aware you might miss out on interest or market growth for a short period.
7. Keep an Eye on Withdrawal Rules
Once your money is in a LISA, you’ll get a 25% government bonus, but withdrawals come with restrictions:
- No penalty if used to buy your first home (worth up to £450,000) or after age 60.
- 25% penalty if withdrawn for any other reason – meaning you could lose some of your own money.
So only transfer money you won’t need in the short term.
8. Should You Transfer or Keep Your Existing ISA?
Transferring into a LISA makes sense if:
- You’re planning to buy your first home soon
- You’re under 40 and can benefit from the 25% bonus
- You’re comfortable with the withdrawal restrictions
You might prefer to keep your Cash or Stocks ISA if:
- You want flexible access to your money
- You’re already over 40
- You expect to exceed the £4,000 annual LISA limit
Final Thoughts
Transferring money from an existing ISA into a LISA can be a smart move – especially if you’re saving for your first home and want to maximise the government bonus.
Just make sure to use the official transfer process, stay within the annual limit, and choose a provider that suits your goals. Done correctly, it’s one of the most efficient ways to boost your savings tax-free.
