What is a Lifetime ISA?

If you’re a saver you’ll probably be interested to learn more about the Lifetime ISA – Les Roberts explains how this brand new savings account works.

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A big piece of news in the Budget was the announcement of the Lifetime Individual Savings Account – the Lifetime ISA.

From April 2017, you’ll be able to get a 25% government top-up on your savings for a house or retirement.

If you’re aged between 18 and 40, you can open a Lifetime ISA from April 2017.

You can save up to £4,000 a year, and the government will give you a top-up of up to £1,000 a year until your 50th birthday.

You can either put the money towards buying your first house, or saving for your retirement.

If you’re saving for your first house, you can use it to buy a home worth up to £450,000, anywhere in the UK.

If you’ve already got a Help to Buy ISA, you’ll be able to transfer those savings into a Lifetime ISA in 2017, or carry on saving in both ISAs separately.

 But, you’ll only be able to use the government bonus from one of them to buy your house.

The other option is to use the money to save for your retirement.

After your 60th birthday, you’ll be able to take all your savings out tax-free.

You can take out some or all of the money before you turn 60 if you want to, but you’ll lose the government bonus, and you’ll have to pay a 5% charge.

 

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