Posted by Malcolm Wallace | July 20, 2016
I don’t think I was the only one who expected this year’s budget to be heavily pensions focussed. Thankfully it wasn’t, and that left a big space for the ‘headline act’. Step forward the new Lifetime ISA! Much like a ‘normal’ ISA.
You can save money in a tax free environment, there are differences though. You can save up to £4,000 each year, and receive a government bonus of 25% – that’s a bonus of up to £1,000 a year. You can use some or all of the money to buy your first home, or keep it until you’re 60 – it’s up to you.
- You can open a Lifetime ISA account between the ages of 18 and 40, and
- Any savings you put into it before your 50th birthday will receive an added 25% bonus from the government
- Accounts will be available from April 2017
- You can save as little or as much as you want each month, up to £4,000 a year
- The total amount you can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017
That all sounds very straightforward, we like it when the tax man gives us money, so if you’re saving for your first home, or want to bolster your retirement savings, come and talk to us!
If you withdraw the money before your 60th birthday you will lose the bonus and an interest/growth on this. A further 5% penalty charge will also have to be paid so consider any withdrawals carefully. They are also limited to one account per person.