LISA – the new Lifetime ISA
Saving for your first house and saving for retirement are two hot topics given the current financial climate. With it getting more and more difficult for people to save for life’s big milestones, the government has come up with new initiatives to make it a little easier, and one of those is the Lifetime ISA.
What is a lifetime ISA?
The Lifetime ISA is a tax-free savings initiative introduced by the government this April. It serves two main purposes, for first time buyers to be able to save for a deposit and get on the property ladder, and for later in life, as an option for retirement savings.
How does it work?
Each year, you can save up to £4,000 tax-free. This can either be in a lump sum or by saving extra cash when you can. The government will then add another 25% bonus to your savings every year until you reach 50. If you saved the full £4,000 you would receive an extra £1,000 from the government making your pot £5,000.
Who can have one?
Anyone aged over 18 and under 40 can open a LISA.
Can you have a Lifetime ISA and a regular ISA?
Yes, but you will have to split the overall limit between the accounts. In 2017/18 the ISA limit will be £20,000.
Can you have a Lifetime ISA and a Help to Buy ISA?
Yes, but you won’t be able to claim the first-time buyers bonus on both. You would only be able to claim the Help to Buy ISA bonus for a house and claim the Lifetime ISA bonus for retirement.
Where can I get a Lifetime ISA?
It seems not many places!
Currently only Skipton Building Society are offering the cash version of the product with other providers opting to only offer stocks and shares options. Keep an eye out as a couple of high street banks have said they are looking to offer the product in the next tax year.
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