Lifetime ISA

edited 22 November 2020 at 12:07AM in ISAs & Tax-free Savings
3 replies 193 views
mattoomattoo Forumite
6 Posts
Part of the Furniture Combo Breaker
edited 22 November 2020 at 12:07AM in ISAs & Tax-free Savings
Hello, 

Wonder if anyone could help? I've not really paid attention to the Lifetime ISA thinking it was only for saving towards a home but it caught my eye recently as I'm nearly 39 and noticed I don't have long left if I want to open one. 

So I'm looking at it as a 2nd pension option rather than toward first home as I have already purchased a family home. Everywhere says that normally an employer pension beats the LISA and especially if you are a higher rate taxpayer. However, I'm in a slightly unusual yet fortunate position whereby my joint employer/employee pension contributions per year are excellent and at retirement, my pension will likely be greater than the LTA. 

Therefore, would it make sense for me to save £4000 per year in the LISA and at retirement age I can access this whole pot tax free, having taken advantage of 11 years of the govt. top up? I can't find any examples where it is suggested to be better value or am I better to open a SIPP and claim 40% tax relief?

Thank you for your time and help.

Replies

  • Alistair31Alistair31 Forumite
    665 Posts
    500 Posts Third Anniversary Name Dropper
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    LISA sounds ideal for your situation.
  • AlexlandAlexland Forumite
    8.8K Posts
    1,000 Posts Fourth Anniversary Photogenic Name Dropper
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    So if you are already contributing the maximum you can to your workplace pension and have used any previous carry forward allowance but are still paying 40% tax on some of your income then the pension option is exhausted so there is no harm in taking the 25% bonus on LISA contributions.
  • JakeMMJakeMM Forumite
    37 Posts
    Ninth Anniversary 10 Posts Combo Breaker
    Open one now! For retirement, potentially think to a stocks and shares ISA as you should consider an investment of 10 years plus to go for stocks over cash.

    But just open one and chuck £1 in. Then you're in no rush to make this decision, and the account is live. You can then leave it for a few years if you want, before you make this decision. 
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