Lifetime ISAs guide

eskbanker

Elisa42 said:

My daughter is buying a 30% share of a house that is being sold for £595,000. She has had a H2B ISA and latterly a LISA. Can she use her LISA towards her deposit to buy her share of the house, as her share is £178,500? The people she is buying with are not first-time buyers, but she is.
Any advice would be greatly appreciated.

If the purchase price of the property exceeds £450K then a LISA can't be used without penalty - the fact that the individual is buying a stake valued below the LISA limit doesn't override that (otherwise couples could buy properties at nearly £900K).

hieveryone

I've asked a question over on savings board about ISA's but thinking I should investigate a LISA. I currently have 20k in a standard cash ISA from this year and was planning to just open another one for the new tax year. 

Would I be better to open a LISA now (I'm 39), stick 4k in, and then I can put another 4k in after the tax year and get 2 lots of bonus? 

eskbanker

hieveryone said:

I've asked a question over on savings board about ISA's but thinking I should investigate a LISA. I currently have 20k in a standard cash ISA from this year and was planning to just open another one for the new tax year. 

Would I be better to open a LISA now (I'm 39), stick 4k in, and then I can put another 4k in after the tax year and get 2 lots of bonus? 

Do you mean that you've paid £20K of new money into your cash ISA this tax year?

If so, then unless it's a flexible ISA, the only way to get any of that into a LISA before the cutoff would be via an ISA transfer, but that's highly unlikely to complete in time, especially if you haven't even opened it yet.

If you still have £4K headroom in your £20K 2023/24 ISA allowance then you can indeed pay that into a new LISA, which would generate a bonus, with this being repeatable again from next week.

hieveryone

eskbanker said:

hieveryone said:

I've asked a question over on savings board about ISA's but thinking I should investigate a LISA. I currently have 20k in a standard cash ISA from this year and was planning to just open another one for the new tax year. 

Would I be better to open a LISA now (I'm 39), stick 4k in, and then I can put another 4k in after the tax year and get 2 lots of bonus? 

Do you mean that you've paid £20K of new money into your cash ISA this tax year?

If so, then unless it's a flexible ISA, the only way to get any of that into a LISA before the cutoff would be via an ISA transfer, but that's highly unlikely to complete in time, especially if you haven't even opened it yet.

If you still have £4K headroom in your £20K 2023/24 ISA allowance then you can indeed pay that into a new LISA, which would generate a bonus, with this being repeatable again from next week.

Thanks, I don't think it is a flexible one unfortunately, so that may be out. However, from the new tax year I can open a LISA and put 4k in, and then another ISA with 16k in is that right? 

eskbanker

hieveryone said:

eskbanker said:

hieveryone said:

I've asked a question over on savings board about ISA's but thinking I should investigate a LISA. I currently have 20k in a standard cash ISA from this year and was planning to just open another one for the new tax year. 

Would I be better to open a LISA now (I'm 39), stick 4k in, and then I can put another 4k in after the tax year and get 2 lots of bonus? 

Do you mean that you've paid £20K of new money into your cash ISA this tax year?

If so, then unless it's a flexible ISA, the only way to get any of that into a LISA before the cutoff would be via an ISA transfer, but that's highly unlikely to complete in time, especially if you haven't even opened it yet.

If you still have £4K headroom in your £20K 2023/24 ISA allowance then you can indeed pay that into a new LISA, which would generate a bonus, with this being repeatable again from next week.

Thanks, I don't think it is a flexible one unfortunately, so that may be out. However, from the new tax year I can open a LISA and put 4k in, and then another ISA with 16k in is that right? 

Yes, that's right.

hieveryone

eskbanker said:

hieveryone said:

eskbanker said:

hieveryone said:

I've asked a question over on savings board about ISA's but thinking I should investigate a LISA. I currently have 20k in a standard cash ISA from this year and was planning to just open another one for the new tax year. 

Would I be better to open a LISA now (I'm 39), stick 4k in, and then I can put another 4k in after the tax year and get 2 lots of bonus? 

Do you mean that you've paid £20K of new money into your cash ISA this tax year?

If so, then unless it's a flexible ISA, the only way to get any of that into a LISA before the cutoff would be via an ISA transfer, but that's highly unlikely to complete in time, especially if you haven't even opened it yet.

If you still have £4K headroom in your £20K 2023/24 ISA allowance then you can indeed pay that into a new LISA, which would generate a bonus, with this being repeatable again from next week.

Thanks, I don't think it is a flexible one unfortunately, so that may be out. However, from the new tax year I can open a LISA and put 4k in, and then another ISA with 16k in is that right? 

Yes, that's right.

From calculators, it seems that if I pay in the max per year of £4000 for the next 11 years, I'll have paid in £42.240, but my 'pot' will be worth £90,609 when I'm 60 - which seems a little... too good to be true?! 

eskbanker

hieveryone said:
From calculators, it seems that if I pay in the max per year of £4000 for the next 11 years, I'll have paid in £42.240, but my 'pot' will be worth £90,609 when I'm 60 - which seems a little... too good to be true?! 

I'd regard such calculators with suspicion - for a start you'd pay in £44K if contributing £4K/year for 11 years, but the returns will inevitably be based on assumptions which may or may not turn out to be accurate.  £90K sounds like a lot of money but its real-terms value will be substantially less in 21 years time, due to inflation, so don't be seduced by an apparently large number like that, as expressed in 2024 money terms!

If this is money towards long-term retirement planning, you're presumably looking at a S&S LISA rather than a cash one?

masonic

hieveryone said:

eskbanker said:

hieveryone said:

eskbanker said:

hieveryone said:

I've asked a question over on savings board about ISA's but thinking I should investigate a LISA. I currently have 20k in a standard cash ISA from this year and was planning to just open another one for the new tax year. 

Would I be better to open a LISA now (I'm 39), stick 4k in, and then I can put another 4k in after the tax year and get 2 lots of bonus? 

Do you mean that you've paid £20K of new money into your cash ISA this tax year?

If so, then unless it's a flexible ISA, the only way to get any of that into a LISA before the cutoff would be via an ISA transfer, but that's highly unlikely to complete in time, especially if you haven't even opened it yet.

If you still have £4K headroom in your £20K 2023/24 ISA allowance then you can indeed pay that into a new LISA, which would generate a bonus, with this being repeatable again from next week.

Thanks, I don't think it is a flexible one unfortunately, so that may be out. However, from the new tax year I can open a LISA and put 4k in, and then another ISA with 16k in is that right? 

Yes, that's right.

From calculators, it seems that if I pay in the max per year of £4000 for the next 11 years, I'll have paid in £42.240, but my 'pot' will be worth £90,609 when I'm 60 - which seems a little... too good to be true?! 

If inflation over those 21 years averaged 3.5%, then the £90,609 would be worth about £44,000 in today's money, so nowhere near 'too good to be true' territory in my view.

hieveryone

eskbanker said:

hieveryone said:
From calculators, it seems that if I pay in the max per year of £4000 for the next 11 years, I'll have paid in £42.240, but my 'pot' will be worth £90,609 when I'm 60 - which seems a little... too good to be true?! 

I'd regard such calculators with suspicion - for a start you'd pay in £44K if contributing £4K/year for 11 years, but the returns will inevitably be based on assumptions which may or may not turn out to be accurate.  £90K sounds like a lot of money but its real-terms value will be substantially less in 21 years time, due to inflation, so don't be seduced by an apparently large number like that, as expressed in 2024 money terms!

If this is money towards long-term retirement planning, you're presumably looking at a S&S LISA rather than a cash one?

Thank you - I guess relatively 'long term' (I'm 39). Stocks and Shares ISAs scare me a little! 

hieveryone

masonic said:

hieveryone said:

eskbanker said:

hieveryone said:

eskbanker said:

hieveryone said:

I've asked a question over on savings board about ISA's but thinking I should investigate a LISA. I currently have 20k in a standard cash ISA from this year and was planning to just open another one for the new tax year. 

Would I be better to open a LISA now (I'm 39), stick 4k in, and then I can put another 4k in after the tax year and get 2 lots of bonus? 

Do you mean that you've paid £20K of new money into your cash ISA this tax year?

If so, then unless it's a flexible ISA, the only way to get any of that into a LISA before the cutoff would be via an ISA transfer, but that's highly unlikely to complete in time, especially if you haven't even opened it yet.

If you still have £4K headroom in your £20K 2023/24 ISA allowance then you can indeed pay that into a new LISA, which would generate a bonus, with this being repeatable again from next week.

Thanks, I don't think it is a flexible one unfortunately, so that may be out. However, from the new tax year I can open a LISA and put 4k in, and then another ISA with 16k in is that right? 

Yes, that's right.

From calculators, it seems that if I pay in the max per year of £4000 for the next 11 years, I'll have paid in £42.240, but my 'pot' will be worth £90,609 when I'm 60 - which seems a little... too good to be true?! 

If inflation over those 21 years averaged 3.5%, then the £90,609 would be worth about £44,000 in today's money, so nowhere near 'too good to be true' territory in my view.

That's true, but then I guess what I had saved in cash without the bonus would be worth even less by then?