From April next year any adult under the age of 40 will be able to open a new Lifetime ISA will be able to open a new type of savings account called a Lifetime ISA. Every year they will be able to save up to £4,000 a year and will receive a bonus of 25% for every pound they save. Contributions can continue to be made up until the age of 50. The account can be used as a deposit for a first home and can be withdrawn with the government bonus at any time after the age of 60. Although it will not affect many people in Bury the Government will put a limit on the price of the first time home that the fund can be used to purchase of £450,000. The interest and any growth in the underlying investments will be tax free.
It is always difficult to predict how a new idea like this will develop but my gut feeling is that this savings vehicle will continue to develop and become the principal means of people saving for their retirement. Traditional pension plans have had such a bad press and even after the recent changes which mean retirees are no longer forced to purchase an annuity they are still seen as being very inflexible. Hopefully, lots of people will make use of the new Lifetime ISA’s. I wish such a product had been about when I was starting out in work.
3 thoughts on “Lifetime ISA”
David, you say it can be used as a savings account for a first home. But am I right in thinking you can’t withdraw the money until you’re over 60. What sort of first time buyer is over 60?!
I guess the scheme only pays a bonus then if there isn’t an early withdrawal?
Funds can be withdrawn at anytime after the first 12 months to be used for buying a house for the first time. They can be withdrawn only after the age of 60 for use in retirement.
Ohh there was. You missed it. It was called an equity linked insurance policy. It was/is (I have 2 left) simple. I pay 10 pds a month into a joint life policy, unit linked to shares, tax claimed back on my payments. Anyhow I started in 1973, took one out every year for 15 years.They paid my mortgage off and built the swimming pool ohh I still have a large pot that I could cash in etc., Gordon of the Brown killed them off when he raided the pension industry. Good old politicians. Will look at starting one of these for my grandchildren.
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