Any advice on LISAs for my partner and I?

08 November 2021

Question by Ashleigh

Hello,

I have been gifted a deposit of more then the £4k allowance that is allowed to be paid into a LISA. In one year can I open my Partner a LISA to add the extra in even though he wont be on the mortgage application he would be a first time buyer. His credit is poor so wouldn't be accepted for a mortgage.


Answered by

Hi Ashleigh,

Thank you for your question.

You and your partner are able to use your Lifetime ISA savings to put towards a deposit on your first home, as long as you meet the following criteria:


Your account has been open for over a year.

  • You are a first-time buyer and the property you're purchasing will be your home.

  • The property is in the UK and priced at £450,000 or less.

  • You use a solicitor or conveyancer to act for you in the purchase.

  • You are purchasing the property with a mortgage.


Based on the information you have provided, I think you have a number of things to consider when it comes to gifting some of your deposit money to your partner to contribute to a Lifetime ISA in his name. I have set each of these out below.

1. Your Lifetime ISA allowance is £4,000 each tax year. This means that you could choose to contribute £4,000 of the gift into your Lifetime ISA now, and the remainder on 6th April 2022. This could be more suitable as your partner's new Lifetime ISA would have to be open for a year before he would be able to benefit from the government bonus, which would restrict you from purchasing a house until next November.

2. The property must be purchased with a mortgage. There is guidance to suggest that your partner would be able to use his Lifetime ISA to jointly purchase the house, even if he is not named on the mortgage. However, I would strongly suggest discussing this with your solicitor before proceeding.

3. It is important to remember that any gift to your partner is permanent and once completed you cannot change your mind. He could gift the funds back to you but this would have to be his choice. As such you would have to be comfortable that if the house purchase did not go ahead, or your relationship broke down, you would not have any entitlement to the gift now in your partner's name.

So to answer your question yes, you can gift the amount which is above your £4,000 allowance to your partner to contribute to a new LISA in the current tax year. However, it might be more appropriate to retain the full amount and make a top-up contribution into your Lifetime ISA in April to ensure you don't fall into any of the pitfalls outlined above. If your partner does not become a joint owner on your first home, he could always set up a Lifetime ISA which he would be able to use should you move house and purchase a property together in the future.

If you do have any further questions about the Lifetime ISA or gifting I would suggest speaking with a financial adviser.

All the best.