The lowdown on Lifetime ISAs

by Leeds Building Society

Last updated: 6th April 2017

 

The lowdown on Lifetime ISAs

The Lifetime ISA made its debut on 6th April 2017. Here’s what you need to know:

An added bonus

The Lifetime ISA will allow you to save up to £4,000 each year and receive a bonus from the government of 25% on any savings you put in (that’s up to £1,000 a year). The savings and the bonus can either be used towards a deposit on your first home or saved until you reach retirement. If you open a Lifetime ISA between the ages of 18 and 40 you’ll receive the 25% bonus on any savings you put in every year up to the age of 50.

Choose how much you want to save each month

You can save as little or as much on a monthly basis as you like, as long as you don’t save any more than £4,000 a year.

Helping you to make that move

You can use your savings and bonus towards a deposit on your first home (worth up to £450,000). If you have a Help to Buy ISA, you’ll be able to transfer these savings into the Lifetime ISA when it’s available (but you’ll only be able to use the bonus from one of these accounts to buy a house).

Save for your retirement

You can withdraw money from your Lifetime ISA at any time before you are 60, but you’ll have to pay a 5% charge and will lose the government bonus and any interest on it. After you turn 60, you can take out all of your savings tax-free – which might just come in handy for those retirement plans.

In April 2017, there was also a change to the overall ISA allowance; it increased to £20,000 for the 2017/18 tax year.

For more information about the Lifetime ISA, head to www.gov.uk.

This article contains public sector information licensed under the Open Government Licence v3.0 www.nationalarchives.gov.uk/doc/open-government-licence/version/3/.

This guide is intended as a summary only. It does not constitute legal or financial advice given by Leeds Building Society. No reliance should be placed on this guide. We recommend that you seek independent legal advice and/or financial advice if you have any questions or queries.

Leeds Building Society only offers Cash ISAs. Cash ISAs are available to individuals aged 16 and over who are resident in the UK for tax purposes.