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Lifetime ISAs guide

edited 14 May 2018 at 1:33PM in ISAs & Tax-free Savings
2.4K replies 367K views
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  • greensaladgreensalad Forumite
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    Ed-1 wrote: »
    The H2B ISA isn't a separate product - it's a cash ISA so you can only pay into one cash ISA per year. The lifetime ISA however is a separate product so you can pay into that and a cash ISA in the same year.

    Thanks for clarifying.
    2020 Debt Repayments
    Virgin Money CC    £2,080.49/ £4,427.73 = £2,347.24 left / 47%
    Emma mattress    £252.72 / £336.96 = £84.24 left / 75%
    Smart watch    £82.68 / £185.99 = £103.31 left / 33.3%
    Boyfriend's MBNA CC    £111.67 / £5,499 = £5,387.33 / 2%
    MBNA CC    £400.14 / £ 400.14 = £0 left / 100%
    Car loan     £671.98 / £671.98 = £0 left / 100%
    Neyber loan     £2,657.65 / £2,657.65 = £0 left / 100%

    Put £8,000 in LISA by April 2021    £2,418 / £8,000 / 30.2%

    Buy a house in 2021    £3,190.66 of £42,500 / 7.5%

  • PhilBeePhilBee Forumite
    6 posts
    In the LISA guide it says:

    A little aside...

    Not to do with your choice, but it's worth taking a look at the real cleverness behind this from the Treasury. If people use a LISA rather than a pension, as it comes from taxed income it gets the Treasury tax revenue now. If people put it in a pension, the Treasury has to wait years until it gets tax. So, this could be Mr Osborne cleverly grabbing cash out of future Chancellors' pockets.

    I do not really understand this because it also says that the bonus is paid at the end of the tax year so surely it is only delaying the tax refund for up to a year.

    Exactly. The tax is lost to both future chancellor and today's chancellor, because it goes back to the saver at the end of each tax year in the form of the 25% bonus. Mr Osborne only gains if the saver is a higher rate taxpayer.
  • It says "So on the surface the amount you put in and get are pretty similar for basic-rate taxpayers."

    How is this true?

    Pension: Earn £100, after-tax £80, put in £80 topped up to £100, take out after-tax £80

    LISA: Earn £100, after-tax £80, put in £80 topped up to £100, take out £100

    Where am I going wrong?
  • One thing not mentioned in the article's comparison of a LISA and pension is that a pension pot is excluded from means testing but an ISA currently isn't.

    If at any time while having cash in an LISA someone lost their job, their savings in the LISA might mean they cannot claim means tested benefits. If their money had been put into a pension pot, that wouldn't count as savings.

    Is Osborne sneakily trying to reduce the future welfare bill?
  • ashton53ashton53 Forumite
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    I know that the bonus is only paid until age 50, but can you still contribute between ages 50-60, and would interest still be paid after age 50?

    Just wondering as there’s a 10 year gap between the bonus ending at age 50 and being able to take it out without any restrictions for your pension at age 60. I don’t know if LISA is considered ‘dormant’ for those 10 years (where both contributions and interest aren’t added), or semi-dormant (interest is still added, but contributions must stop), or active (you can still contribute and interest will be paid, but obviously no bonus will be added). There’s not much information about what happens during this 10 year ‘gap’ (other than that you are penalised for withdrawing it early, unless you are buying your first house).
  • colstencolsten Forumite
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    You won't be asked to leave your savings without growth & dividends etc for ten years but I think you need to be a little patient for the finer details.
    1.9 The government wants it to be as easy as possible for individuals to save additional funds on top of those receiving a bonus (for example, if they want to contribute more than £4,000 a year or
    keep contributing after age 50) and will explore with the industry the best way to achieve that.

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508176/Lifetime_ISA_final.pdf
  • CapricornLassCapricornLass Forumite
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    I've got a question, which I haven't seen any answer to as yet...

    I think I'm right in saying that any money held in a pension is protected from creditors if a self-employed person goes bankrupt. Does LISA have the same protection?
    Sealed Pot Challenge no 035
  • masonicmasonic Forumite
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    I think I'm right in saying that any money held in a pension is protected from creditors if a self-employed person goes bankrupt. Does LISA have the same protection?
    At this stage, there's no reason to think it would be treated differently to a normal savings account in that respect. There has been some discussion about a LISA counting towards savings in a means test for benefits, which of course pension savings do not.
  • King_Of_FoolsKing_Of_Fools Forumite
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    However, it would seem a bit unfair counting the LISA as assets given that you may not be able to access it penalty free for up to 42 years!
  • colstencolsten Forumite
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    However, it would seem a bit unfair counting the LISA as assets given that you may not be able to access it penalty free for up to 42 years!
    Always remember: you don't have to have a LISA. If you are saving for the long run, you can do a personal pension and/or a SIPP instead.
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