MSE News: Budget 2016: Lifetime ISA to launch with 25% state bonus for the under-40s

MSE_Luke

A new lifetime ISA for the under-40s will pay savers a 25% bonus on up to £4,000 saved per tax year...

Read the full story:
'Budget 2016: Lifetime ISA to launch with 25% state bonus for the under-40s'

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coastline

If payments can be added any time then this is an ideal savings plan for low paid and self employed people.?
For many they simply can't commit to regular payment plans so anything from £0-4,000 a year with a bonus is a nice little earner..
Even after 20 years you could build up a tidy sum paying in the maximum and that would be over £170,000 at 5% growth.

Dan83

So I can save upto £4000 per year until I'm 50, if I need to take money out, I will pay 5% to get my own money, I can have my money back when I'm 60 with no penalty. Does sound that good of a deal to me.

jimjames

Dan83 wrote: »

So I can save upto £4000 per year until I'm 50, if I need to take money out, I will pay 5% to get my own money, I can have my money back when I'm 60 with no penalty. Does sound that good of a deal to me.

If you don't like it then use a normal ISA or pension. You're not forced to do this one

Archi_Bald

Dan83 wrote: »

So I can save upto £4000 per year until I'm 50, if I need to take money out, I will pay 5% to get my own money

How will you pay 5% to get your money out?

masonic

Archi_Bald wrote: »

How will you pay 5% to get your money out?

There is apparently a 5% charge levied if you withdraw early from a LISA (first time house purchase excepted).

jamiecharlton203

Me and my partner have both just opened help to buy ISA's this week. But now we're confused, should we continue to save in the help to buy ISA and then switch this in 2017 to the lifetime ISA? if we do that does that mean we don't gain any bonuses for the money we would've saved over the next 12 months? and if we're planning on buying a home within the next 3 years will it be worth just sticking to the help to buy ISA and saving the max each month for 3 years and then taking the bonus from that account? sorry for all the questions but this is big news!

masonic

jamiecharlton203 wrote: »

Me and my partner have both just opened help to buy ISA's this week. But now we're confused, should we continue to save in the help to buy ISA and then switch this in 2017 to the lifetime ISA? if we do that does that mean we don't gain any bonuses for the money we would've saved over the next 12 months? and if we're planning on buying a home within the next 3 years will it be worth just sticking to the help to buy ISA and saving the max each month for 3 years and then taking the bonus from that account? sorry for all the questions but this is big news!

I thought I'd read about an option to transfer in a HTB ISA to the lifetime ISA - the details of that are obviously not yet known, but it would be strange if this didn't allow for the bonus to be added to the funds transferred. It's probably best to wait until the dust has settled and all of the information has been revealed before changing what you are doing. There is a lot of speculation flying around on the basis of what was said in one speech.

Dan83

So, from the details I have read so far (the link above) I see no reason why you can't put £4000 in for 12 months, get a 25% bonus (or what ever they call it) then with draw your £4000, pay the 5% fee (£200) and be £800 up, then repeat every year.

Ed-1

jamiecharlton203 wrote: »

Me and my partner have both just opened help to buy ISA's this week. But now we're confused, should we continue to save in the help to buy ISA and then switch this in 2017 to the lifetime ISA? if we do that does that mean we don't gain any bonuses for the money we would've saved over the next 12 months? and if we're planning on buying a home within the next 3 years will it be worth just sticking to the help to buy ISA and saving the max each month for 3 years and then taking the bonus from that account? sorry for all the questions but this is big news!

If you transfer funds from a Help to Buy ISA to a Lifetime ISA during 2017/18 tax year then you get a 25% bonus on these funds paid into the Lifetime ISA on 5th April 2018. However the Lifetime ISA needs to have been open a minimum of 12 months to withdraw and use the bonus for a house purchase.

colsten

You have got literally a full year before you need to make any decisions. By that time, everything should be a lot clearer.