Lifetime ISA |The Share Centre

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Lifetime ISAs

The Government has announced plans
to launch Lifetime ISAs in April 2017,
but what is a Lifetime ISA?

Lifetime ISAs at a glance

All the key things you need to know about Lifetime ISAs:

  • Flexible saving for your first home and/or retirement
  • 25% annual bonus from the Government 
  • Available to those aged between 18-40
  • Launching in April 2017
  • Pay in up to £4,000 each tax year

important info

Please be aware that the Government are currently discussing the features and rules for Lifetime ISAs with the industry.

 

These are subject to change and final details will be announced closer to launch. 

What is a Lifetime ISA?

Lifetime ISAs are Individual Savings Accounts which the Government will be launching to help young people (18-40 year-olds) invest/save flexibly for the long term. The aim is that you will not have to choose between saving for your first home and retirement. You can use some or all of the money to buy your first home, or keep it until you’re 60 - it’s up to you. Similar to normal ISAs, you won't have to pay any Capital Gains Tax or further Income Tax on profits you make. If you're not a first time buyer, or prepared to wait until you're 60 to access your savings, Lifetime ISAs will not be beneficial for you.

Get a 25% annual bonus from the Government

The Lifetime ISA limit (how much you can pay in) is £4,000 per tax year and for every pound you pay in, you'll receive a 25% bonus from the Government. That's up to £1,000 of free money every year until your 50th Birthday if you continue to pay in! The Government will pay this bonus directly into your Lifetime ISA. Over your lifetime, you'll be able to make contributions of £128,000 and receive a maximum bonus of £32,000 from the Government, with investment growth on both.

Any money you pay into a Lifetime ISA will contribute towards your annual ISA allowance, which will be increasing from £15,240 to £20,000 in April 2017. You will be able pay money into a Lifetime ISA in addition to a Stocks & Shares ISA, a Cash ISA and an Innovative Finance ISA each year. 

Lifetime ISA

Save for your first home and/or retirement

Any time from 12 months after opening a Lifetime ISA, you will be able to use your savings and bonus towards a deposit on a first home worth up to £450,000 in the UK. Accounts are limited to one per person (rather than one per home), so two first-time buyers can both receive a bonus when buying together. If you have a Help to buy ISA, you can transfer those savings into a Lifetime ISA in 2017, or continue saving in both, but you will only be able to use the bonus from one of the accounts to buy a house.

You can also use the money for your retirement: after your 60th birthday, you can take out all your savings tax-free. You can withdraw the money at any time before you turn 60, but you will lose the government bonus (and any interest or growth on this). You will also have to pay a 5% charge.

The Share Centre will offer Lifetime ISA from April 2017

We intend to offer the new Lifetime ISA on launch date, April 6th. We believe this is a great product for an age group (18-40) that will benefit from the 25% annual government bonus as they save for a house deposit or their retirement.