On the face of it, persuading the Chancellor of the Exchequer to pay a large lump sum into your personal savings account seems like the stuff of fairytales but, after yesterday’s budget announcement, it seems that if you are currently 17 or under and will be 18 in April 2017, you will qualify to open a new ‘Lifetime ISA’ that will accrue up to £32,000 in government contributions up until to your 50th year.
The Lifetime ISA will enable any individual saver between the ages of 18 and 40 at the time they open the ISA to save up to £4,000 per annum in their Lifetime ISA. In return, they will benefit from an annual bonus calculated at 25% of the annual contribution made by the saver. The ISA is billed as a way of helping ‘Generation Rent’ into a new home but it’s use is not restricted to home ownership. In addition to the Government’s contribution, you would hopefully accrue an investment return on the cash balance.
You can take all your savings, interest and/or investment growth and bonus out of your Lifetime ISA tax-free after your 60th birthday. If you're buying a first home you can take it out at any point and get all the perks, as long as you've had it for at least a year.
If you take the money out before you're 60 without buying a first home, you get no bonus and there's a 5% penalty on the amount you withdraw. In this scenario you can make a partial withdrawal and lose the perks on the amount taken, but continue to accrue them on what's left in.
If you are over 40 when Lifetime ISAs are launched then unfortunately you will be ineligible for this instrument. However, you will benefit from increases in the annual investment threshold in personal ISAs. Furthermore, if you are eligible for a Lifetime ISA next year, you will be able to roll in £4,000 per annum to your new Lifetime ISA and qualify for the 25% Government contribution in the normal way.
Interestingly, if you are under 40 and already own a house, the Lifetime ISA's is still available to you, perhaps making you born lucky?
For detailed advice on this new financial product we recommend you speak with an Independent Financial Advisor. This information is still out for consultation and may change in due course.
Recent posts
Data shows landlords could miss out on green mortgages due to expired energy performance certificates.
Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.
Pros and Cons of Equity Release
11 days ago
Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.
Your House Viewing Checklist
12 days ago
It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.
Half of over 60s predicted to benefit from accessing housing wealth through Equity Release
15 days ago
There are millions of homeowners over the age of 60 who are likely to release money from their homes to pay for their lifestyle during retirement giving those who are 'asset rich but cash poor' a way to live out their retirement the way they wish.
Average Age of the First Time Buyer in the UK
22 days ago
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
Delayed Start Mortgage from Skipton
24 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
2 May 2025
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
More information
Trusted by
