LISA - Correct contributions so far?

Question

I opened a LISA with a provider just before the end of the 17/18 tax year (27/03/2018) and deposited the maximum contribution (£4,000). Therefore I should receive the Government bonus of 25% at some point in the next month (May 2018).

Since it is now the 18/19 tax year I am aware that I can no longer deposit the maximum contribution at the end of the tax year as the Government bonus is now paid on a monthly basis. I realised it almost the end of the month so I deposited £333.33 (£4,000 / 12) today (29/04/2018). Will I receive the Government bonus next month? Or am I not eligible as it is too late into the month?

Basically what I'm trying to ask is: Am I correct in paying £333.33 per month into my LISA from today up until the end of this tax year after contributing the maximum amount at the end of March?

Answer 1

As you said, for 2017/18, the government bonus was/will be paid at the end of the year. For 2018/19 onwards, the bonus is paid monthly on whatever amount you have paid in that month.

So if you paid in £333 in April then you will get the bonus of ~£83 as soon as April's bonus is processed (i.e. in May/June). But in particular, you are not limited to this amount. If you had paid in £1000 in April, you would receive £250 of bonus for April; if you had paid in the full £4000, you would get the whole £1000 bonus, and so on. If you pay in nothing in April, you can still get the whole bonus for 2018/19 by making sure you have paid in the full £4000 before the end of the year. So if you wanted to, you could still not pay anything in until March 2019, pay the full £4000 then, and receive the full £1000 bonus for 2018/19. However if you have the money available already this may not be the best option.

Whether 29/4/18 is too late in the month for the payment to count towards April's contribution might depend on your provider, but I don't see why it would be too late. You should be fine. But as above, even if you had been too late, the payment would simply contribute to the bonus in May instead.

In general MoneySavingExpert has a good article covering the LISA bonuses (see #2 under "Lifetime ISA need-to-knows"), although it is not very clear about your exact question of whether the monthly bonus means you must pay in each month (you don't). I confirmed the above description of the bonus system with my own provider to clarify.