With just a couple of days until the launch of the Lifetime ISA, we thought it was worthwhile highlighting some of the benefits and drawbacks of the government’s latest offering.
In a nutshell, anyone between 18 and 40 can open a Lifetime ISA (or LISA), and save up to £4,000 a year (until your 50th birthday) - and the government will add a top up bonus of 25% at the end of each tax year - so a bonus of up to £1,000 a year.
There are 2 uses for the LISA:
First Time Buyers - to help buy your first home:
Savings can be put towards your first home that is worth up to £450,000. If there are 2 of you buying, you can use a LISA each (as long as you are both first time buyers).
Save for retirement:
Once you turn 60, you can withdraw all your savings tax free.
Things to consider:
Workplace Pensions vs. Lifetime ISAs
In almost all cases, a Workplace pension will still be the most tax efficient way to save for retirement simply because of your employers contribution - which a LISA would not benefit from.
If you would like further information, or just to have a chat about the different options, feel free to give us a shout on 01302 244 977.Publish date: 31st March 2017