VIEW FROM THE HOUSE
MANY constituents will have heard the announcement of the Lifetime ISA which was part of the Budget measures. Two days before the Budget, however, details of another scheme to help savings were launched – the creation of a new savings scheme for people on low incomes.
Ideally we would all like the reassurance of having some savings to fall back on in an emergency. But nearly half of all adults in the UK have less than £500 set aside in the bank or building society.
The new Help to Save scheme means that up to 3.5 million people will be eligible for a governmentbacked bonus on their savings. Anyone who is in work and who is in receipt of Universal Credit or working tax credits will be able to save up to £50 a month and receive a 50 per cent bonus after two years. That will be worth up to £600.
These savers will be able to choose whether to keep on saving for a further two years and receive another £600 bonus. After the full 4 years, savers could have a nest egg of £3,600, with £1,200 of that coming from the government. It is part of a wider initiative to help improve the life chances of disadvantaged people.
The average age of someone buying a first home has increased steadily and now most people can’t afford to buy until they are in their late 30s.
The Lifetime ISA will help people in this situation who are aged between 18 and 40. Announced in the Budget, the scheme allows people to save up to £4,000 a year and receive a government bonus of up to £1,000 a year.
The savings and the bonus can be used towards a deposit on a first home worth up to £450,000. What is more, two first time buyers could club together because they will receive the bonus when buying together. People who have already taken out a Help to Buy ISA will be able to transfer those savings to a Lifetime ISA when these are introduced in 2017.
For all savers, the amount which can be put each year into an ISA to earn tax-free savings will increase from £15,240 to £20,000 from April 2017.