If you are a UK resident and aged between 18 and 40 (or know someone who is), it’s worth knowing about the benefits of the Life ISA scheme. But you need to act quickly as new applications are only being accepted until the end of November 2019.
If you open a Lifetime ISA before the age of 40, until you are 50 you can add up to £4000 a year and this will be also be rewarded by a 25% bonus of up to £1000 by the government. Sounds interesting right?
The £4000 per year is included as part of your £20,000 annual ISA allowance. The Lifetime ISA amount can be made up of cash or stocks and shares or a combination of both. After the age of 50 you won’t be able to pay any more into the Lifetime ISA and it won’t qualify for the government bonus but it can remain there and continue to attract interest or investment returns.
So how do you take money out of a Lifetime ISA? There are 3 ways – if you are aged over 60, buying your first home or are terminally ill with less than 12 months to live. For any other reason, you’ll have to pay a 25% charge so it’s really not worth it unless you intend to use it for a longer term investment or as a means to buy your first property.
There are several caveats to the 3 ways to get to your cash so it’s worth reading the HMRC article in full. For example, the property must be worth £450,000 or less and you’ll need to be buying it with a mortgage among other things.
Talk to us about the Lifetime ISA and we can work out if it’s a good option for you or members of your family. Even if you throw a few pounds in just to get it started, make sure you open it before the end of November 2019.