LISA or no LISA

dunstonh

boombaba wrote: »

apologies

tax relief at 20% on pension contributions of £2,880 a year (which will be grossed up to £3,600).

thats what i pay now...

That would only be your limit if you were earning £3600 or less a year.

lisa110rry

Definitely "LISA" for me!

(Just aiming for a smile here...)

boombaba

if you earn less than the threshold which i do then yeah thats the max i can contribute

I did smile thanks LISA

EdSwippet

boombaba wrote: »

... what are people thoughts on the goalposts being moved in the future?

You can count on it. A dead certainty. The only unknown is how long it before it happens. Based on the government's track record over the past decade or so, a full year of stability would be something of a record run.

grey_gym_sock

boombaba wrote: »

if you earn less than the threshold which i do then yeah thats the max i can contribute

sorry to labour the point, but less than which threshold? if you earn less than £3,600, then the max you can contribute is indeed £3,600. but if you earn less than the £11,000 (the personal allowance) but more than £3,600, then you can contribute up to 100% of what you earn.

since you already have a property, the only use for a LISA is as an alternative to a pension (or as an additional pension). for any shorter-term savings/investment, you don't want to use LISA or pensions.

but so far as long-term investment (for retirement) goes ... which is better, LISA pension or real pension?

in terms of cutting tax, a LISA pension is marginally better in your situation (viz. self-employed - so no employer pension or employer contributions to consider; and not paying higher-rate tax - so tax relief on pension contributions is only at 20%).

for each £800 you put into a LISA, the 25% bonus turns that into £1000. when you're 60, you can take out the £1000, tax-free.

for each £800 you put into a pension, 20% tax relief turns that into £1000 inside the pension (so far, that's the same as the LISA). when you're 57(-ish - the exact age may change), you can take out 25% tax-free, and the other 75% as taxable income. perhaps the income will be covered by your personal allowance, in which case there's no tax to pay, so you get £1000 out, the same as the LISA. but perhaps you'll have other income using up your personal allowance, in which case you'll pay some tax, and you'll get out less than £1000 (e.g. you get out £850, supposing you pay 20% tax on the taxable £750).

so the pension might give the same tax saving as the LISA, or might give less saving. but can't give more saving. so that's advantage to the LISA.

the dates for access vary a little (60 vs 57). but they might change anyway. and are close to start with. so not much in it there.

LISA has the option of early access subject to loss of the bonus + a small penalty. (pension has no early access.) that could be an advantage (flexibility) or a disadvantage (you could squander your money, or it could be taken to pay your debts, or you could be denied means-tested benefits because you could access this capital).

crabbstyle

Hi All

I'll probably open a LISA when first available on 6th April 2017.

This website states the Help to Buy ISA has 2.75% monthly interest but I cannot find what it is for a LISA?

Or does this depend on who you open it with?... On that note, any suggestions who to open with? (convenient high street lender preferred)

Many thanks

Matt

bowlhead99

crabbstyle wrote: »

I'll probably open a LISA when first available on 6th April 2017.

OK. The products will be available no earlier than 6th April

This website states the Help to Buy ISA has 2.75% monthly interest but I cannot find what it is for a LISA?

The Help to Buy products are available and people have been using them to save for some time.

The LISA products are not yet available, as you just said. They are not being available until 6th April at the earliest. So, we don't know what the market rates will be at that time, because we are not there yet.

Or does this depend on who you open it with?...

Like any savings or investment account, your returns depend on who you open it with. There is no fixed rate that everyone has to offer. They will offer whatever they want and you can pick whatever you want when you see the choices in the marketplace.

On that note, any suggestions who to open with? (convenient high street lender preferred)

Check the rates of the convenient high street lenders, once they actually have created some products that you can use. If you don't think the rates are high enough, look at the inconvenient ones instead.