Sunday Express

Lifetime chance to save


- By Harvey Jones

THE HELP to Buy Isa closed its doors to new applicants yesterday, which means savers keen to get a government bonus on their savings now only have one option, the Lifetime Isa.

This tax-free savings vehicle is targeted at first-time buyers looking to save a property deposit, but can also be used to save for retirement.

The Lifetime Isa, sometimes called a Lisa, pays 25 per cent on top of anything you save yourself up to £4,000 a year, which would attract the maximum annual bonus of £1,000.

It is a terrific incentive and while the initial reception was lukewarm, partly due to its complex rules, the death of the Help to Buy Isa may finally start focusing minds.

Parents and grandparen­ts play a key role in encouragin­g the younger generation to sign up for what is effectivel­y free cash from the Government.


Laura Suter, personal finance analyst at investment platform AJ Bell, said the Help to Buy Isa has funded almost 260,000 property purchases: “If you have already opened one you still have a decade to use it and claim the bonus.”

Its replacemen­t, the Lifetime Isa, was launched in April 2017 to help people aged between 18 and 39 save for their first home or assist with retirement.

Once you have opened one, you can continue paying in until age 50. Someone who opened an account on their 18th birthday and contribute­d the maximum £4,000 every year would get a total bonus of £32,000.

Lifetime Isa rules can be complicate­d, including one that states you need to open an account a full year before using it to buy a property. “That is to stop people paying money in, immediatel­y claiming the bonus and then withdrawin­g the funds,” Suter said.

There are two choices of Lifetime Isa – one for cash and one for stocks and shares. “You cannot open both in the same year,” she added.


You cannot put the money towards a home if you have ever owned a property before, even a part share of an inherited property inside or outside the UK. Nor can you use the money for an investment property.

However, you can still use it to save for retirement and claim your bonus, provided you do not touch your pot until age 60.

If you withdraw money before that age for any reason other than to buy your first home, you face a 25 per cent exit penalty.

Familiar names such as AJ Bell, Hargreaves Lansdown, Nutmeg, Onefamily, Moneybox, Skipton Building Society and The Share Centre all offer Lifetime Isas, so shop around.

Some may let you open an account with just £1, while others demand £100 or even £500. Minimum regular investment­s typically start at £25 a month.

Hargreaves Lansdown personal finance analyst Sarah Coles said the Lifetime Isa can be the key to a dream home: “You can buy a property worth up to £450,000, whereas the Help To Buy ISA was limited to £250,000 outside London.”

However take note that the £4,000 Lifetime Isa is part of this year’s £20,000 Isa limit, you do not get it on top.

 ?? ?? TAX-FREE: Get on the property ladder
TAX-FREE: Get on the property ladder

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