LIFETIME ISAs

We are very happy to announce that our chosen platform Fundment are now offering Lifetime ISAs.

This is great news for anyone under 40 years of age.

Lifetime ISAs were primarily launched to help young people save for a house deposit. You can put in upto £4000 and the government will add an additional 25% i.e. up to £1000.

There are various caveats to be aware of but in essence if you cannot use it for a qualifying house purchase, you cannot access it without penalty until you are 60.

But is that so bad?

For basic rate tax payers, it is better than a normal ISA and a personal pension. The HMRC will give you a 25% bonus (free money) and will allow you to keep all of it tax-free, once you are 60. A normal ISA will give you no free money but allow you to access it whenever tax-free. And a personal pension will give you 20% tax relief (effectively 25% free money) but only allow you to keep a quarter of it tax-free, the rest is taxable. All three products grow free of Capital Gains and Income Tax.

The downside? Because it is so good, you can only put in £4000 per annum, unlike a standard ISA, which is £20,000. The 25% uplift (max £1000) does NOT count as part of the £20,000 overall allowance.

And why under 40? Lifetime ISAs (LISAs) are only available to people under 40 and can only be paid into until aged 50.

Also, if you have used the money in the LISA to buy a house, you can still contribute to it until aged 50, as a long-term savings/retirement vehicle.

So please get in touch if you think the LISA is for you or anyone you know.

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