The recent budget laid out quite a few changes for the regular saver. ISAs were handed another variation to the current range available; this new one is known as the LISA (Lifetime ISA) and is created for people to save for the future.
Designed to encourage those under the age of 40, the LISA can be used to help buy your first home or save for your retirement.
The LISA acts as a bonus scheme – the government will add an extra 25% to what you have saved. So if you contribute the maximum amount of £4000 a year the government will contribute an additional £1000 as a savings incentive.
A key benefit of the LISA is you won’t pay tax when you come to take your money out, either in retirement or when you buy that first home.
Be cautious though because as appealing as the above sounds, there are restrictions to the LISA. If you decide to withdraw the money before the age of 60 and decide not to put it towards your first home you will lose the government bonus (and any interest or growth on this). You will also have to pay a 5% charge.
If you have a Help to Buy ISA already in place you can transfer those savings into the Lifetime ISA from 2017.
Getting one pound for every four is a straightforward incentive to save, but there are restrictions.
Contact the team at Platinum to see how we can make the LISA work for you.