Lifetime Isa customers see delay on February bonus payments of up to £1,000 due to taxman glitch
- Each month Lifetime Isa holders receive a 25% bonus on what they’ve saved
- They can earn up to £1,000 on £4,000 of savings every tax year
- Taxman is meant to pay the bonuses every month but a ‘technical issue’ meant customers have not yet received their February bonus
A blunder by the taxman means first-time buyers could have potentially been left as much as a £1,000 out of pocket if they tried to buy a home at the end of February, This is Money can reveal.
Some Lifetime Isa customers expecting their 25 per cent bonus from HMRC at the end of February did not receive it, after what it described as a ‘technical issue’.
Bonuses are now calculated and paid on a savers’ monthly contributions, rather than at the end of each tax year, meaning someone who deposited the maximum £4,000 yearly allowance between 5 January and 5 February could have been left without the £1,000 payment if they tried to buy a home at the end of last month.
The taxman, which pays the bonuses to Lifetime Isa providers, apologised and said it had now fixed the problem. It said providers would receive the money over the next few days
HMRC apologised for the error, which it said it has now fixed, and said anyone facing a delayed bonus payment would receive 3.25 per cent interest.
However, while this sounds like a good interest rate, someone owed the full £1,000 bonus receiving interest for a delay of five days would receive just 45p.
The taxman added this was the first time Lifetime Isa bonuses had ever been late. HMRC said yesterday Lifetime Isa providers would receive any outstanding bonus payments over the next few days.
This is Money was informed of the issue by someone who held a Lifetime Isa with app-based provider Moneybox, who said his bonuses were still classed as ‘pending’.
He was told by someone from Moneybox’s customer service that HMRC had been ‘late paying out the Lifetime Isa bonuses to us this month, and we have not yet received it’.
They added it was ‘a delay in their usual timings’, rather than a ‘failure to pay’, but said it was ‘affecting all Lifetime Isa customers’.
HMRC has a deadline to pay the Lifetime Isa bonus within 14 days of the 19th day of any month, but usually pay the bonuses before month-end.
The problem could be down to February being a shorter month, but this was not a problem last year.
Skipton Building Society, the largest Lifetime Isa provider, told This is Money it had also been affected by the delay, and said it would cover the bonus payments for anyone trying to buy a home while waiting for February’s bonus and be later reimbursed by the taxman.
The Lifetime Isa pays a 25 per cent government bonus on savings of up to £4,000 a year.
The money saved can be used to buy a first home up to £450,000 after the account has been opened for a year, or withdrawn after the age of 60.
Withdrawing the money for any other purpose incurs a 25 per cent penalty.
Lifetime Isa customers of Skipton earned £100.6million in government bonuses in 2019, and held an average balance of £5,619, according to the building society.
It found the majority of customers paid in £4,000 in one go, meaning a customer who did so last month could have been left waiting for their £1,000 top up.
HMRC said in a statement: ‘We are aware of a technical issue, which has delayed the payment of Lifetime Isa bonuses.
‘The issue has now been fixed and outstanding claims for bonus payments are being processed. We apologise for any inconvenience caused.’