Lifetime ISA

24 Jan 2017

"Money for nothing....Bricks for free!"

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​April sees the launch of the new Lifetime ISA. This has been designed specifically for those aged between 18 and 40 to help with the purchase of a first home or to save for retirement. The Government will provide those savers with a bonus of 25% on annual savings of up to £4,000 up until the saver reaches 50 years old. All savings invested before the ISA holders 50th birthday will receive the 25% bonus meaning an impressive £1,000 for every £4,000 saved annually from 18-50. Those managing to invest the maximum amount each year would have accumulated £128,000 of savings and a £32,000 bonus! The combined savings and bonus amount can be used for the purchase of a first home worth a maximum of £450,000 based in the UK. Alternatively, the fund could be used in retirement. In this instance, the savings and bonus can be withdrawn tax-free at anytime after the saver reaches 60 years old. If the funds are left invested then any interest or growth will remain tax-free. If the investment is withdrawn pre-60 for anything other than a first home purchase, the Government bonus is removed and a penalty of 5% is imposed. The Lifetime ISA limit forms part of the annual ISA allowance which from April 2017 will increase to £20,000. The bonus payment will be received annually at the end of the tax year.

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