LISA 25% penalty charge

Alexland

eskbanker said:

Alexland said:

For a basic rate tax payer that will no longer have a sal-sac pension then keeping LISAs for retirement could be seen as a better loophole for making additional retirement contributions which they might want to close.

I'm only aware of a planned capping of NI relief for sal-sac pensions, so don't see how a LISA (with no NI relief at all) would support people any better than continuing with the sal-sac?

Sorry I could have worded it better. From 2029 once a basic rate taxpayer has made £2k pa sal sac pension contributions then their additional contributions will only attract income tax relief and then 75% will be taxed on withdrawal. If they put the additional contributions into a LISA, if the product is still giving bonuses, they will get the 25% bonus and no tax on withdrawal.