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

bowlhead99

adfegg wrote: »

So, what happens when the bonus is paid out? Say I've been keeping £4000 in the account, and at the end of the year I get my bonus payment of £1000. But if I can only save up to £4000 in the Lifetime ISA, does this mean the bonus has to be paid into a different account?

Like existing ISAs. You are limited in what new money you can put in each year. You are not limited in what you can earn within the account.

guitarman001

I opened a Halifax H2B ISA a few months ago and let's face it, would like to transfer to one of these new ISAs. Anybody know the fees involved or...?

Also I assume I can open a lifetime ISA and also an innovative finance ISA in the same year?

coastline

TrustyOven wrote: »

Warning: I've not had cofffee yet so brain is not at normal speed...

I've just had a realisation... how will those with low pay be able to make that much use of this?

On my previous job, earning about 27k before tax (so not low paid), my pension contributions of 5% were approx £117 per month. That's £1404 a year. And the employer matches...

Are those on low pay able to pay 5%+ in pensions? Judging by some of the posts in the Auto-Enrolment forum here, some are not even able to cope with the minimum 1% contributions... on lower pay.

Seems that they would never be able to approach the 4k annual limit of a LISA... Sure, they'd get 25% extra from the gov't, but they wont get anywhere near the 4k limit.

Are people getting unduly excited about this LISA?

I agree its difficult for many to save much money but the point I was highlighting was making payments when you can and not setting up monthly payments etc.
There's no doubt most people couldn't pay in the maximum but its a handy way of building a lump sum for retirement.
If there's a situation regarding means tested benefits then this needs to be addressed by the government if possible.

rpc

guitarman001 wrote: »

I opened a Halifax H2B ISA a few months ago and let's face it, would like to transfer to one of these new ISAs. Anybody know the fees involved or...?

Cash ISAa should be free to transfer. But unless you are going to hit the £20k subscription limit you can just take £4k out and put it back in the LISA

Also I assume I can open a lifetime ISA and also an innovative finance ISA in the same year?

You can subscribe to: one cash, one S&S, one IFISA, one LISA, with no more than £20k new money across them all.

ratechaser

I'm a couple of years too old to benefit here, but the cynic in me is saying that this is the next step towards the eradication of pre-tax pension contributions which will really be felt by anyone currently under 40 - GO is throwing a sweetener into the mix, but it's only a matter of time.

A warning sign to higher rate taxpayers especially to make full use of their annual allowances if they can afford to...

Flobberchops

Just read a MSN article that seems to say HTB ISAs are being scrapped in favour of LISAs come 2019.

Source: Here

Now, we all knew that HTB ISAs were being withdrawn for new account sign-ups in November 2019 as per the FAQ here, but the scheme itself would run until 2030. So, why bring up this non-change in the MSN article? Are they saying that the scheme will be scrapped totally, even for existing holders, in 2019? Or a case of shoddy/misleading journalism?

jimjames

One concern I can see is that people are likely to just leave the funds in cash rather than investing which won't be great for 40 year timescales. Ideally if you invested in the early years then you have maximum time for compounding to work yet if you want to use for house purchase then you want the security of cash. Overall this seems like a bad idea and separate pension would appear to make more sense to me.

guitarman001

rpc wrote: »

Cash ISAa should be free to transfer. But unless you are going to hit the £20k subscription limit you can just take £4k out and put it back in the LISA



You can subscribe to: one cash, one S&S, one IFISA, one LISA, with no more than £20k new money across them all.

More questions, sorry!

I mainly use HTB ISA for the 4% interest.

If you have a HTB ISA and a lifetime ISA.... what benefits do you get having both? Am I right in saying I still get 4% from HTB ISA... BUT I would NOT get the government contribution from both - maybe only the smaller contribution (which I think is from the HTB ISA)?

HTB government contribution only paid out when you buy a house.

When is the lifetime ISA 25% bonus paid - every year? Do you HAVE to buy a house to get that amount?

The house price limit has increased for the lifetime ISA (£450k?) - has it increased for the HTB ISA (it was £250k max)?

phew

guitarman001

Just reading this:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508176/Lifetime_ISA_final.pdf

So you get the money regardless of whether or not you buy a house?
Unlike the HTB ISA...
And you can only withdraw the money if not used for a house... hen you get to age 60!?

You can contribute up to age 50.

Lifetime ISA seems more attractive in general, though 4% from Halifax HTB ISA is pretty attractive. Though on smaller amounts..

I need to read it again later. Lifetime ISA sounds the best (can put more in for the same government reward and use it for retirement) but HTB ISA has that 4% which is decent.

I think the best route is to have both. Use HTB for the 4% interest and lifetime for the government contribution - but I think I read that you'd only get the lower HTB government amount. Sucks!


If I used HTB ISA for house deposit, am I right in saying the lifetime ISA monies could be kept for retirement? I bet not.

masonic

guitarman001 wrote: »

I mainly use HTB ISA for the 4% interest.

If you have a HTB ISA and a lifetime ISA.... what benefits do you get having both? Am I right in saying I still get 4% from HTB ISA... BUT I would NOT get the government contribution from both - maybe only the smaller contribution (which I think is from the HTB ISA)?

HTB government contribution only paid out when you buy a house.

When is the lifetime ISA 25% bonus paid - every year? Do you HAVE to buy a house to get that amount?

The house price limit has increased for the lifetime ISA (£450k?) - has it increased for the HTB ISA (it was £250k max)?

As far as we know, the current rules applying to HTB ISAs will not change, although there have been hints the scheme will be phased out earlier than expected and rolled into the lifetime ISA scheme. You will not get any bonus on this unless you buy a house with it.

For the lifetime ISA, there is no need to buy a house, but you must otherwise hold until you are 60 in order to keep the bonus (which is added every year on any money you have contributed that year). You'll get this regardless of whether you have the HTB ISA (for now anyway).

For someone in your shoes, it would be worth running both schemes in parallel for as long as you can.