VIEW FROM THE HOUSE

Buckinghamshire Advertiser - - OPINION - DO­MINIC GRIEVE MP for Bea­cons­field

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.

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