Can I keep my Lifetime ISA if I move abroad?

Can I keep my Lifetime ISA if I move abroad?

To open and keep contributing to a Lifetime ISA, you need to be a UK resident. As long as you continue to tick all the boxes which make you a UK resident, you can keep paying into your Lifetime ISA as normal. So if you travel a lot, this won’t impact your LISA contributions unless you spend fewer than 91 days in the UK within the tax year.

Who counts as a UK resident?

Even if you’re a British citizen and hold a British passport, you might not be a UK resident. This is because your residency status depends on the tax you pay here in the UK. 

You’re considered a UK resident if:

• You spent 183 or more days in the UK in the tax year (which runs April–April)
• You have a home in the UK (rented or owned) for longer than 90 days (and you stayed in it for at least 30 days in a row)
• You worked full-time in the UK for any period within the tax year (even as little as 1 day)

You’re usually a non-UK resident if:

• You spent fewer than 16 days in the UK (or 46 days if you have not been a UK resident for the 3 previous tax years)
• You worked abroad full-time (averaging at least 35 hours a week)
• You spent fewer than 91 days in the UK within the tax year (and you spent less than 30 days working)
  

Are there any exceptions?

There are some exceptions (e.g. you’re in the armed forces and get stationed or deployed abroad). If you’re unsure which category you fall into, you can use HMRC’s online residence checker.

What happens to my Lifetime ISA if I’m not a UK resident?

You have to tell your LISA provider that you’re no longer a UK resident. While you’re away, you can keep your LISA open, and all the money you have in there (bonus, investments and all) will stay where it is, but any other payments will be on pause.

Moving to the USA 🇺🇸? 

Some LISA providers (including us) aren’t able to offer financial services to US residents because of certain American tax rules. For this reason, you might have to close your account (which means you’ll pay the government’s 25% early withdrawal fee). If you keep your LISA open while you live in the US, you’ll be taxed by the IRS on all money you hold in your account, including your bonus and any return on investments.

After spending time abroad, you’ve realised this is more than just a visit. So what happens to your Lifetime ISA?

Can I buy my first property with a Lifetime ISA abroad?

No, you cannot use a Lifetime ISA to buy a property abroad. To buy a home with a Lifetime ISA, the property has to be here in the UK and it has to be your first home. Even if you bought a place abroad without your Lifetime ISA, you wouldn’t be able to use your LISA to buy a home in the UK if you wanted to move back in the future.

What should I do with my LISA if I buy a home abroad?

👵 You could keep your Lifetime ISA for retirement

Lifetime ISAs are designed to help people save for a home, or for retirement. So if you can’t use your Lifetime ISA to buy a home, but know you want to retire in the UK someday, you could use it as a booster for your pension. Just remember, you have to be a UK resident to save or invest in your Lifetime ISA, which means you can’t put money towards your LISA retirement fund while you’re living abroad.

🏧 You could withdraw all your money

If you decide that the UK just isn’t for you, or you want to use some of the money in your LISA to extend your travels, you can withdraw all of your money from your account. However, if you’re not using your LISA to buy a home or retire here in the UK, the government will charge you a 25% early withdrawal fee. This means you’ll lose the LISA bonus (25%), plus you’d also have to pay the government an extra £6.25 for every £100 you’re taking out of your account.