If your investments fall in value, you could lose money. Tax allowances and the benefits of tax-efficient accounts could change.
If you're 18-39, save up for your first home or retirement with our Lifetime ISA and receive a government bonus of up to £1,000 on your savings per tax year.
Lifetime ISA benefits
25% government bonus
Receive a bonus on all the qualifying payments you pay in.
Experts handpick and manage your investments.
No UK Income Tax or Capital Gains to pay on profits.
No account fees
No dealing fees, initial fund charges or monthly admin fees.
Investments to suit you
Simply choose between (or blend) from our range of funds.
Invest up to £4,000 this tax year
Your Lifetime ISA limit counts towards your annual ISA allowance.
What is a Lifetime ISA?
Lifetime ISAs (Individual Savings Account), or LISAs, are a tax-free way for people aged 18-39 to save for either their first home or to complement their pension for retirement.
There are two types of Lifetime ISA - Cash Lifetime ISA and Stocks and Shares Lifetime ISA. Both allow your money to grow without paying Capital Gains Tax or further Income Tax on profits. On top of which, you will also receive a 25% government bonus on the money you have subscribed, up to a maximum of £1,000 in the current tax year.
How does it work?
How much can I invest?
Your Lifetime ISA allowance is £4,000 for this tax year. On top of this you will receive a government bonus of 25% of your investment each tax year that you subscribe. Lifetime ISAs make up part of the overall ISA allowance of £20,000 in the 2020/21 tax year, so you'll need to bear this in mind if you have other types of ISAs. As with all ISAs, this limit may change in future years.
You can continue to subscribe into your Lifetime ISA until your 50th birthday, after which you may still earn interest on your savings, if you have a Cash Lifetime ISA, or returns on your investments, if you have a Stocks and Shares Lifetime ISA.
Using your Lifetime ISA
After subscribing into your Lifetime ISA for 12 months, you can use the money to buy your first house, up to a value of £450,000. Or you could wait until you turn 60 and withdraw the money then.
If you want to take the money out before you're 60 and you're not buying your first home, you will receive a 25% withdrawal charge on the money you withdraw. Doing this will mean you get less back than you put in. This charge was reduced by the government to 20% as a response to the coronavirus pandemic. The reduced charge is only applicable on withdrawals made between 6 March 2020 to 5 April 2021, when it will return to 25%.
A Lifetime ISA to suit you
You can invest in one or a combination of our three Multi Manager funds of funds, depending on your attitude to risk and investment aim. They each contain a range of funds from well-known providers, which enables you to benefit from their expertise and spread risk by diversifying across different markets and sectors.
|ES Share Centre Multi Manager Growth Fund||Low||Income|
|ES Share Centre Multi Manager Growth & Income Fund||Medium||Balanced|
|ES Share Centre Multi Manager Growth Fund||Higher||Growth|
Lifetime ISA costs
Your fund’s annual management charge and ongoing charge (see links above) are taken from the fund itself, so you don’t need to worry about paying them separately. There are no account fees, dealing fees, or initial fund charges to pay.
|3-5 day transfers||Free|
|Same day transfer||£25|
|Overseas||£50 (restrictions apply)|
Before making a withdrawal, please read the important considerations below.
|Statements & contract notes by post rather than email||£2.40 per month|
|Transfer to another provider||£25 per account|
|Bounced cheque or unpaid Direct Debit||£25|
|Deceased customer account administration||£100|
|Overdue fee charge - Sell stock (per investment)||£7.50 (To recover overdue fees on your account we may need to divest the equivalent value of your investments, plus this additional charge to cover the cost of the trade)|
Costs and charges illustration
To give you a feel for the costs involved, our cost sheet includes an illustration of costs you will pay, based on how much you invest and what type of investments you choose.
Payment of charges
Ongoing fund charges are automatically taken from your fund. If you opt for postal statements & contract notes, the fee will be collected from your account on the 26th of each month, or the next business day.
What interest will be paid on cash?
Gross interest on any cash you hold will be credited to your account quarterly at the Bank of Scotland base rate, minus 3.5% (min. 0%). We may retain the difference between the interest paid to you and the interest we are able to earn, as permitted by The Financial Conduct Authority.
- You will incur a 25% government charge on any money you withdraw before you are 60, unless you are using it to buy your first home or are terminally ill. Therefore, you may get back less than you pay in. You may also incur this charge if you transfer your Lifetime ISA to another type of account. This charge was reduced by the government to 20% as a response to the coronavirus pandemic. The reduced charge is only applicable on withdrawals made between 6 March 2020 to 5 April 2021, when it will return to 25%.
- If you invest in a Lifetime ISA instead of a pension, you may lose the benefit of your employer’s contributions. It also might affect your current and future entitlement to means tested benefits. If in doubt, please seek independent financial advice.
- Lifetime ISA benefits and allowance could change in the future.
View a detailed list of Lifetime ISA rules.
Find out more about the Lifetime ISA
With a Stocks and Shares Lifetime ISA, the money you subscribe is invested in the stock market. This provides you with greater potential for earnings on your investment, albeit at a greater risk.
Our Stocks and Shares Lifetime ISAs allow you to invest in our three managed fund of funds at low, medium and higher levels of risk, depending on your investment aim. These are ideal for the less experienced investors as our experts will handpick and manage your investments on your behalf.
Cash Lifetime ISAs, on the other hand, are more stable but provide a much lower potential return due to low interest rates. For example, AJ Bell currently (as of July 2019) offers a gross interest rate of 0.15% on savings of over £50,000.
Both types of Lifetime ISA receive the same 25% government bonus every tax year.
With a Stocks and Shares Lifetime ISA, your capital is at risk. As with any investment, the value of your funds can go down as well as up, and while it's unlikely, you could potentially lose the money you have invested.
Due to the generous government bonus and relatively high allowance, Lifetime ISAs are a great way to save for first-time buyers or people preparing for retirement. However, if you plan on using the money for any other reason, you might want to consider opening a Ready-made Stocks and Shares ISA instead.
If you want to save for your later life, Lifetime ISAs can be great for supplementing your pension. If you choose to only have a Lifetime ISA and not a workplace pension, you should consider the impact of losing the employer contributions on your finances. Your current and future entitlements to mean-tested benefits could also be affected.
In order to use your Lifetime ISA to buy a house you'll need to have subscribed to your Lifetime ISA at least 12 months ago and you'll need to be a first time buyer.
The property must be in the UK and cost £450,000 or less. It will also need to be your main residence - you cannot use your Lifetime ISA for a buy-to-let property. If the property is still being built it will need to be your main residence as soon as it is ready. If you've previously owned a property in another country you are not able to use a Lifetime ISA for buying a property. This includes any property that you inherited or was given to you.
If you're buying the property with cash, you can still use the money in your Lifetime ISA but you'll have to pay the government withdrawal charge of 25%. This means you'll get back less than you put in. If you're using a mortgage or buying the house through a shared ownership scheme, your government bonus will remain intact. This charge was reduced by the government to 20% as a response to the coronavirus pandemic. The reduced charge is only applicable on withdrawals made between 6 March 2020 to 5 April 2021, when it will return to 25%.
If you aren't a first time buyer, when you turn 60 you can use your LISA towards your retirement. You can continue to subscribe and get the 25% government bonus until you reach the age of 50. After this, you may continue to receive interest on your savings or returns on your investments, depending on the type of Lifetime ISA you have.
Although a Lifetime ISA can help to support you in later life, it is rarely used instead of a pension. If you're receiving a workplace pension with contributions from your employer, these will likely outweigh the Lifetime ISA's 25% government bonus.
If you’ve maxed out contributions on your workplace pension and you want to save more, the Lifetime ISA could be a good option.
You must pay tax if the savings in your pension pots exceed £40,000 in a year or £1.03 million in total. So if you’re going to reach either of these pension limits, the Lifetime ISA might work as an additional way to save for later in life.
The Help to Buy ISA was launched in December 2015, followed by the Lifetime ISA in April 2017. Both ISAs are designed to give first time home buyers help in saving a deposit or purchasing a property. However, there are several key differences between the two products.
To find out more about the differences, read our complete guide to Lifetime ISAs vs Help to Buy ISAs.
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