2016 Budget - ISA changes

Marvel1

Thinking more about this, I'm 34 this year (get that out of the way).

Young people get help to buy etc and now this, but if you are 40 at the time of the lifetime ISA, you get no benefit all the while paying for it out your income tax. Unless I am missing something.

masonic

chiram2015 wrote: »

Interesting budget for investors but I just wonder with the higher ISA limits that the banks will offer a higher interest rate if you transfer & max out - alas pipe dreams by me probably!

No need to dream about cash rates. The higher ISA limits will apply to S&S ISAs and even Iffy ISAs.

Nekaro wrote: »

One question I have. On the money saving expert article regarding this it states "if you take the money out before you're 60 without buying a first home, you get no bonus and there's a 5% penalty on the amount you withdraw"

However there is a statement in one of the previous paragraphs or the MSE article seems to contradict this and I'm confused!!

It states "When withdrawing money, any bonus for that tax year will be paid at the point of withdrawal".

I think you should consider all of the articles "beta" at the present time. They were put up in a hurry and have been edited and changed through the afternoon. The bonus would be paid if the money was withdrawn to purchase a a first home.

masonic

cjdavies wrote: »

Young people get help to buy etc and now this, but if you are 40 at the time of the lifetime ISA, you get no benefit all the while paying for it out your income tax. Unless I am missing something.

I guess the thinking behind this is that those who will be over 40 have not been faced with the difficulties young people currently face buying a hugely overpriced asset that the Government seems intent should never be allowed to return to fair value. Those over 40 have probably benefited from this bubble. Those who are over 40 probably have a better chance of the state pension surviving long enough for them to benefit from that, too.

Cisco001

So is it mean that one person can only held one lifetime isa?

I get confused about the withdraw.

Let say this year 1, you open lifetime isa in bank a. Put 4000 in. You end up 5000 + interest.

Year 2, could u open new lifetime isa with bank b and keep bank a account open?

Let's say u can open another lifetime isa in bank b, again max out.

Unfortunately, in year 3, you need to withdraw. I assume it is only allowed by closing. Say you close bank b. Will it affect the bonus in bank a?

And how about one start saving really young and manage to max out. What happen when they reach £75k limit? Is the money protected?

Shark

Had a think about this.

Just not enough assurances that further governments will not meddle with the terms. I am 28 now, so will be committing my first lot of funds for 31 years before I can use them (already a homeowner)

Be interested to see comparisons to similar schemes in the USA and how people use them, but from the offset would need a lot of reassurances before committing to 30 years.

Jonnybgood

"When withdrawing money, any bonus for that tax year will be paid at the point of withdrawal".

Does this mean I could pay in the full £4000 during the first month of a tax year, then withdraw immediately to buy my first home and receive the 25% on that 4K? Or does the 25% get divided by the amount of time elapsed during that tax year? I.e. Withdraw after 1 month = 25% / 12 months.

Edit: I am aware that the bonus cannot be applied during the first year. In this hypothetical situation, I am talking about the first month of the second/ third/ fourth/ etc year after opening the account.

Silaqui

I'm a homeowner (sole name on my mortgage). Husband is not, and would be a first time buyer.

If he was to open one of these, and then we purchased a house in joint names, would he be classed as a first time buyer for the purpose of receiving the bonus?

masonic

Silaqui wrote: »

I'm a homeowner (sole name on my mortgage). Husband is not, and would be a first time buyer.

If he was to open one of these, and then we purchased a house in joint names, would he be classed as a first time buyer for the purpose of receiving the bonus?

Probably would have been better to ask on the HTB thread, as it's been asked and answered there already, but yes, individuals on a mortgage application are assessed separately for HTB ISA bonus eligibility.

Ed-1

Jonnybgood wrote: »

Does this mean I could pay in the full £4000 during the first month of a tax year, then withdraw immediately to buy my first home and receive the 25% on that 4K? Or does the 25% get divided by the amount of time elapsed during that tax year? I.e. Withdraw after 1 month = 25% / 12 months.

Edit: I am aware that the bonus cannot be applied during the first year. In this hypothetical situation, I am talking about the first month of the second/ third/ fourth/ etc year after opening the account.

The account needs to be open 12 months before you can claim a bonus but after that you can pay in £4,000 and receive it straight away.

SkyeKnight

jamesd wrote: »

Age distinctions like this one are legal.

But this is a bit different to normal I think. Normally they say - you get child benefit until you are 18, or 3 year olds get free nursery, or whatever and it applies to everyone when they get to 18 or 3 or whatever.

With this they are saying some people can get 10 years of free money all through their forties and other people can't get the same thing at exactly the same age. It would make sense if the cut-off date was 50 because no-one is allowed to contribute in their fifties. Seems weird to me.