Lifetime ISAs guide 16 March 2016 at 6:06PM edited 14 May 2018 at 1:33PM in ISAs & tax-free savings 2.5K replies 383.7K views

MSE_Helen_S

Hi!

This is the discussion thread for the

Lifetime ISA guide.

Click reply below to discuss. If you haven't already, join the forum to reply.


Thanks folks,

veryintrigued

There is already lots of discussion on the following thread. Can it be merged?

http://forums.moneysavingexpert.com/showthread.php?t=5431540

Indeed your colleague has created yet another unrequired thread (in the wrong section)

http://forums.moneysavingexpert.com/showthread.php?t=5431666

koru

I think LISAs provide yet another reason why students should always take the maximum student loan that they are permitted. If the student has, or their parents are willing to provide, cash that they could use to cover tuition fees or living costs, it is already the case that it would be better to hang on the cash. (See Martin's guide on this.) But there's now the extra reason that you can put the cash into a LISA, and get a 25% uplift from the government.
Edit: Of course this only applies to £4k a year. A student loan could be increased by up to £17,200 per year. However, you could slowly move all of this into a LISA, at the rate of £4k per year, though you might be into your 30s before you have moved it all!

koru

One tricky decision might come when you are ready to buy a house, if you have not yet been able to move all your cash into a LISA. Do you use all your money to pay the maximum deposit, or do you just use what is in the LISA, and keep the rest so you can move it into a LISA over the coming years, and get the 25% uplift? Trouble is, you then have to wait til you are 60 to benefit from the 25% uplift.

julianv

Two things I don't know about are:

- Does the govt's £1000 contribution count to our personal ISA limit? ie do we only have to find £19k, or do we contribute £20k across all our ISAs and the govt's £1k is additional (in effect making net contributions £21k).

- If you 'roll-in' a Help To Buy ISA but circumstances change and we don't use a LISA to fund a house, can we still use the bonus cash for retirement, or do we forfeit the bonus?

thanks

parchedpeas

At the moment - although it will change - you could put the £4k in, get a free £1k and then withdraw it all and pay the 5% (£250) charge.

A free £750 a year.

Nice.

[Deleted User]

parchedpeas wrote: »

At the moment - although it will change - you could put the £4k in, get a free £1k and then withdraw it all and pay the 5% (£250) charge.

A free £750 a year.

Nice.

Nope.. the government won't give you the 'free' money if you withdraw it before you are 60, or buying a 1st house. I think having a terminal illness is a criteria they are allowing for getting the money back.

richyg

Sorry I am late to the party on this but if the government is planning on giving people under 40 some free money in a tax free environment at a 20/25 % rate on the condition that it stays:o invested for a long time is it just me or is there a whiff of this being what the future state pension is going to look like.

Or am I just a cynic.:o

Angel316

What about shared ownership? Could you save in a Lifetime ISA and use it to staircase?

tim_n

Am I right in thinking I can put £16k into a S&S ISA on 7th April 2017 and £4k into a LISA, and get the additional £1k, giving me £21k at the end of the year?

tim_n

parchedpeas wrote: »

At the moment - although it will change - you could put the £4k in, get a free £1k and then withdraw it all and pay the 5% (£250) charge.

A free £750 a year.

Nice.

You lose the £1k AND 5%