Young people in the UK rejoice! From 6th April a new tax free savings account will be available for UK residents aged between 18 and 40 years. The Uk government will also contribute to the fund which must be used either for the first time property purchase or for retirement.
The Lifetime ISA allows you to save up to £4,000 per year, which can be in cash and stocks and shares, in whatever proportion suits you.
The UK government will contribute an additional 25% each year until you use the funds to buy your first property. You must use a solicitor for this and the funds are paid direct to them for the property purchase. You must also use mortgage lending to purchase the property.
If your aim is to save for retirement, the funds become available with the government bonus added, when you are 60 years of age.
So for those in the right age bracket this looks like a great deal!
If you already have a ‘help to buy ISA’ you can transfer the whole balance before 5th April 2018 if you wish, or run both alongside each other. From 6th April you’ll be able to only transfer £4,000 of your Help to Buy Isa each year, which will use up your allowance.
There is now a variety of ways to save tax effectively and also to boost your returns with interest rates so low. The total ISA savings limit for 2017/18 is £20,000 and this can be deposited in a combination of the original cash or shares ISAs, the existing Help to Buy ISA and now the new LISA.
Remember to also consider normal savings and investment options as returns may be higher and interest has been tax free to a limit of £5,000 from 6th April 2016.
So now is the time to take a good look at your savings, look for the best savings rates, be sure you’re making the most of the schemes available, getting any bonuses you qualify for and keeping your tax liability down.
For more information check out the HMRC Lifetime ISA pages .
All details above were correct at the time of publishing - for more up to date information please
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