Lifetime ISA (LISA) account holders often have questions regarding how government bonuses and accrued interest are managed, especially during transfers between providers. This article provides a thorough explanation of the key aspects of LISA bonuses, interest, and transfer processes.

Government bonuses, including the 25% contribution based on your LISA deposits, are safeguarded during transfers. If the previous provider has already received the bonus from HMRC, they will pass it on to the new provider during the transfer process. Alternatively, if the bonus has not yet been claimed, the new provider will ensure the request is made, and the funds are deposited into your account once HMRC processes the claim. This ensures continuity, and you will not lose any bonuses due to a provider change.

This schedule ensures that government bonuses, calculated as 25% of eligible contributions within the qualifying periods, are processed accurately. The system is designed to ensure continuity of benefits during provider changes.

The timing of government bonus payments can vary, but typically follows a defined schedule. Bonus periods run from the 6th of one month to the 5th of the next month. Contributions during this qualifying period are included in the next monthly claim. Tembo submits claims to HMRC between the 13th and 19th of the month, and HMRC processes these within 14 days of the 20th of the claim month. In some cases, bonuses may arrive at the previous provider's account after the LISA transfer is initiated. When this happens, the previous provider is responsible for forwarding the bonus to the new provider. While LISA transfers take up to 30 calendar days to complete, some residual payments, such as bonuses, may extend beyond this period. Regardless of timing, Tembo ensures any delayed bonuses are forwarded promptly into the rightful accounts.

Interest on Lifetime ISA contributions and government bonuses accrues daily and is paid monthly. Generally, you can expect interest to be credited to your LISA account on the 8th working day of each month, covering interest accrued during the prior month. Once a government bonus is credited to your Lifetime ISA, it will begin to earn interest alongside your contributions. The total balance in your account (deposits plus bonuses) is used to calculate the interest, ensuring you fully benefit from both your savings and government contributions.

When transferring a Lifetime ISA between providers, both accrued interest and government bonuses will be transferred to the new provider automatically. If an unclaimed bonus or interest exists, the current provider will either forward the amounts once received or inform the new provider to make the necessary claims. No action is typically required from the account holder, although you may contact either provider to check the status of the transfer.

Rest assured that you will not lose your government bonuses when switching between LISA account types (e.g., Stocks & Shares to Cash LISAs). The same principles apply, ensuring that any earned bonuses remain part of your transferred funds.

It is rare, but possible, for bonus payments or accrued interest to be omitted or delayed during the transfer process. In such cases, the previous provider should forward all pending payments to the new provider. If you notice discrepancies, contact both providers to resolve the issue. Tembo will assist in coordinating with former providers to ensure all entitled funds are transferred correctly.

If delays occur due to HMRC processing variations or contributions made near the end of a bonus period, some payments might roll into the next payment cycle. Additionally, bonuses tied to contributions from the previous provider will be claimed by Tembo during the next claim period, introducing slight delays.

In summary, the government bonuses and interest accrued on your Lifetime ISA are reliably included during transfers. Bonuses are retained and continue to earn interest once credited, while any delays in payment are addressed collaboratively between providers. This ensures you do not miss out on any benefits, regardless of provider changes. For any specific concerns about your LISA transfer, feel free to reach out to Tembo’s support team for further assistance.