If you are between the ages of 18 and 40 years old, the latest savings advice is to make a move to flexible savings for a first home and retirement with a Lifetime Individual Savings Account (LISA).

Gordon Kearney, Director and Financial Adviser
Posted in Fiducia News, ISA's, Pensions & Retirement on 17.02.17

Lifetime Individual Savings Accounts are being launched by the Government in April 2017 to help 18-40 year- olds to save and invest flexibly for the long-term. The aim is that people will not have to choose between saving for their first home and retirement, but can save for both in a flexible way.

You can use some or all of the money to buy your first home or keep it until you’re 60. Similar to normal Individual Savings Accounts, there is no Capital Gains Tax payment or further Income Tax on profits taken.

Government Bonus

Individuals can save and invest up to £4,000 each year and receive a government bonus of 25% – that’s a bonus of up to £1,000 a year, and can use some or all of the money to buy a first home or keep it until you are 60 – it’s up to you.

Lifetime ISA accounts will be available from 6 April 2017 and can be opened between the ages of 18 and 40, and any savings put in before their 50th birthday will receive an added 25% bonus from the Government.

There is no maximum monthly contribution – someone can save as little or as much as they want each month (up to £4,000 a year), with the total amount they can save each year into all Individual Savings Accounts being increased from the current £15,240 to £20,000 from 6 April 2017. The £20,000 ISA allowance excludes contributions to any Junior ISAs, which have their own distinct allowance applying to each child.

Saving for a First Home

Any time from 12 months after opening a Lifetime ISA, individuals will be able to use savings and any bonuses from one of the accounts towards a deposit on their first home worth up to £450,000 in the UK.

If you have a Help to Buy Individual Savings Account, you can transfer those savings into a Lifetime ISA in 2017 or continue saving in both, but will only be able to use the bonus from one of the accounts to buy a house.

Saving for Retirement

After an individual’s 60th birthday, they can take out all the savings tax-efficiently. If money is withdrawn before turning 60, you will lose the government bonus (and any interest or growth on this) and will also have to pay a 5% charge.

Gordon Kearney, Director and Financial Adviser
Posted in Fiducia News, ISA's, Pensions & Retirement on 17.02.17

If you would like to know more about how we as Financial Advisers can help you  with your Investments then visit the Investment Management section of  our website: Investment Management or send us email at: email@fiduciawealth.co.uk

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