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  • FIRST POST
    • MSE Luke
    • By MSE Luke 16th Mar 16, 3:45 PM
    • 277Posts
    • 78Thanks
    MSE Luke
    MSE News: Budget 2016: Lifetime ISA to launch with 25% state bonus for the under-40s
    • #1
    • 16th Mar 16, 3:45 PM
    MSE News: Budget 2016: Lifetime ISA to launch with 25% state bonus for the under-40s 16th Mar 16 at 3:45 PM
    A new lifetime ISA for the under-40s will pay savers a 25% bonus on up to £4,000 saved per tax year...
    Read the full story:
    'Budget 2016: Lifetime ISA to launch with 25% state bonus for the under-40s'

    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.
Page 1
    • coastline
    • By coastline 16th Mar 16, 4:06 PM
    • 1,001 Posts
    • 1,136 Thanks
    coastline
    • #2
    • 16th Mar 16, 4:06 PM
    • #2
    • 16th Mar 16, 4:06 PM
    If payments can be added any time then this is an ideal savings plan for low paid and self employed people.?
    For many they simply can't commit to regular payment plans so anything from £0-4,000 a year with a bonus is a nice little earner..
    Even after 20 years you could build up a tidy sum paying in the maximum and that would be over £170,000 at 5% growth.
    • Dan83
    • By Dan83 16th Mar 16, 6:03 PM
    • 645 Posts
    • 259 Thanks
    Dan83
    • #3
    • 16th Mar 16, 6:03 PM
    • #3
    • 16th Mar 16, 6:03 PM
    So I can save upto £4000 per year until I'm 50, if I need to take money out, I will pay 5% to get my own money, I can have my money back when I'm 60 with no penalty. Does sound that good of a deal to me.
    • jimjames
    • By jimjames 16th Mar 16, 6:44 PM
    • 13,234 Posts
    • 12,297 Thanks
    jimjames
    • #4
    • 16th Mar 16, 6:44 PM
    • #4
    • 16th Mar 16, 6:44 PM
    So I can save upto £4000 per year until I'm 50, if I need to take money out, I will pay 5% to get my own money, I can have my money back when I'm 60 with no penalty. Does sound that good of a deal to me.
    Originally posted by Dan83
    If you don't like it then use a normal ISA or pension. You're not forced to do this one
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Archi Bald
    • By Archi Bald 16th Mar 16, 6:51 PM
    • 9,376 Posts
    • 7,432 Thanks
    Archi Bald
    • #5
    • 16th Mar 16, 6:51 PM
    • #5
    • 16th Mar 16, 6:51 PM
    So I can save upto £4000 per year until I'm 50, if I need to take money out, I will pay 5% to get my own money
    Originally posted by Dan83
    How will you pay 5% to get your money out?
    • masonic
    • By masonic 16th Mar 16, 7:06 PM
    • 11,738 Posts
    • 9,384 Thanks
    masonic
    • #6
    • 16th Mar 16, 7:06 PM
    • #6
    • 16th Mar 16, 7:06 PM
    How will you pay 5% to get your money out?
    Originally posted by Archi Bald
    There is apparently a 5% charge levied if you withdraw early from a LISA (first time house purchase excepted).
    • jamiecharlton203
    • By jamiecharlton203 16th Mar 16, 8:07 PM
    • 1 Posts
    • 0 Thanks
    jamiecharlton203
    • #7
    • 16th Mar 16, 8:07 PM
    Help to buy or lifetime ISA?
    • #7
    • 16th Mar 16, 8:07 PM
    Me and my partner have both just opened help to buy ISA's this week. But now we're confused, should we continue to save in the help to buy ISA and then switch this in 2017 to the lifetime ISA? if we do that does that mean we don't gain any bonuses for the money we would've saved over the next 12 months? and if we're planning on buying a home within the next 3 years will it be worth just sticking to the help to buy ISA and saving the max each month for 3 years and then taking the bonus from that account? sorry for all the questions but this is big news!
    • masonic
    • By masonic 16th Mar 16, 8:17 PM
    • 11,738 Posts
    • 9,384 Thanks
    masonic
    • #8
    • 16th Mar 16, 8:17 PM
    • #8
    • 16th Mar 16, 8:17 PM
    Me and my partner have both just opened help to buy ISA's this week. But now we're confused, should we continue to save in the help to buy ISA and then switch this in 2017 to the lifetime ISA? if we do that does that mean we don't gain any bonuses for the money we would've saved over the next 12 months? and if we're planning on buying a home within the next 3 years will it be worth just sticking to the help to buy ISA and saving the max each month for 3 years and then taking the bonus from that account? sorry for all the questions but this is big news!
    Originally posted by jamiecharlton203
    I thought I'd read about an option to transfer in a HTB ISA to the lifetime ISA - the details of that are obviously not yet known, but it would be strange if this didn't allow for the bonus to be added to the funds transferred. It's probably best to wait until the dust has settled and all of the information has been revealed before changing what you are doing. There is a lot of speculation flying around on the basis of what was said in one speech.
    Last edited by masonic; 16-03-2016 at 8:19 PM.
    • Dan83
    • By Dan83 16th Mar 16, 8:17 PM
    • 645 Posts
    • 259 Thanks
    Dan83
    • #9
    • 16th Mar 16, 8:17 PM
    • #9
    • 16th Mar 16, 8:17 PM
    So, from the details I have read so far (the link above) I see no reason why you can't put £4000 in for 12 months, get a 25% bonus (or what ever they call it) then with draw your £4000, pay the 5% fee (£200) and be £800 up, then repeat every year.
    • Ed-1
    • By Ed-1 16th Mar 16, 8:17 PM
    • 2,587 Posts
    • 1,383 Thanks
    Ed-1
    Me and my partner have both just opened help to buy ISA's this week. But now we're confused, should we continue to save in the help to buy ISA and then switch this in 2017 to the lifetime ISA? if we do that does that mean we don't gain any bonuses for the money we would've saved over the next 12 months? and if we're planning on buying a home within the next 3 years will it be worth just sticking to the help to buy ISA and saving the max each month for 3 years and then taking the bonus from that account? sorry for all the questions but this is big news!
    Originally posted by jamiecharlton203
    If you transfer funds from a Help to Buy ISA to a Lifetime ISA during 2017/18 tax year then you get a 25% bonus on these funds paid into the Lifetime ISA on 5th April 2018. However the Lifetime ISA needs to have been open a minimum of 12 months to withdraw and use the bonus for a house purchase.
    • colsten
    • By colsten 16th Mar 16, 8:19 PM
    • 10,414 Posts
    • 9,609 Thanks
    colsten
    You have got literally a full year before you need to make any decisions. By that time, everything should be a lot clearer.
    • masonic
    • By masonic 16th Mar 16, 8:20 PM
    • 11,738 Posts
    • 9,384 Thanks
    masonic
    So, from the details I have read so far (the link above) I see no reason why you can't put £4000 in for 12 months, get a 25% bonus (or what ever they call it) then with draw your £4000, pay the 5% fee (£200) and be £800 up, then repeat every year.
    Originally posted by Dan83
    You lose the bonus, interest and pay a 5% penalty on the money withdrawn based on some of the things I've read (edit: and this is mentioned in the link above). Basically, before 60, you can only withdraw the capital you've paid in (except for a first time home purchase) and would effectively lose everything else.

    Edit: The official Government document states that only interest accrued on the bonus is deducted, so it is actually loss of bonus (and associated interest) and a 5% penalty on the sum withdrawn.
    Last edited by masonic; 17-03-2016 at 1:15 PM.
    • Dan83
    • By Dan83 16th Mar 16, 8:21 PM
    • 645 Posts
    • 259 Thanks
    Dan83
    Me and my partner have both just opened help to buy ISA's this week. But now we're confused, should we continue to save in the help to buy ISA and then switch this in 2017 to the lifetime ISA? if we do that does that mean we don't gain any bonuses for the money we would've saved over the next 12 months? and if we're planning on buying a home within the next 3 years will it be worth just sticking to the help to buy ISA and saving the max each month for 3 years and then taking the bonus from that account? sorry for all the questions but this is big news!
    Originally posted by jamiecharlton203
    Probably best to keep paying into your HTB isa, there is an option to move it into a lifetime isa. When the lifetime isa comes out you can sit down and do the sums, thrn do what is best for you.
  • jamesd
    If payments can be added any time then this is an ideal savings plan for low paid and self employed people.?
    For many they simply can't commit to regular payment plans so anything from £0-4,000 a year with a bonus is a nice little earner..
    Even after 20 years you could build up a tidy sum paying in the maximum and that would be over £170,000 at 5% growth.
    Originally posted by coastline
    No, that's just about the worst group for this. The money is not protected from benefits means tests or insolvency so they could lose the lot. Many pensions are available that allow ad hoc payments and those are safer from those risks.
    • _CC_
    • By _CC_ 17th Mar 16, 6:36 AM
    • 353 Posts
    • 420 Thanks
    _CC_
    This would have far more appeal for me if it didn't have the 5% withdrawal charge and instead you just lost the bonus. It would still encourage long term savings/investment due to the bonus, yet would offer the flexibility and tax efficiency of an ISA.
    • _CC_
    • By _CC_ 17th Mar 16, 6:38 AM
    • 353 Posts
    • 420 Thanks
    _CC_
    You lose the bonus, interest and pay a 5% penalty on the money withdrawn based on some of the things I've read (edit: and this is mentioned in the link above). Basically, before 60, you can only withdraw the capital you've paid in (except for a first time home purchase) and would effectively lose everything else.
    Originally posted by masonic
    You forfeit all the growth? I thought it was just the bonus and any growth on it...
    • masonic
    • By masonic 17th Mar 16, 6:50 AM
    • 11,738 Posts
    • 9,384 Thanks
    masonic
    You forfeit all the growth? I thought it was just the bonus and any growth on it...
    Originally posted by _CC_
    From the article:
    You can take out money at any time, but if you do so before you're 60 and it's not for a home, you'll lose the state bonus and any interest earned. Plus you'll pay a 5% charge.
    Edit: But from the official document:
    1.112 The government proposes that savers can make withdrawals at any time for other
    purposes, but with the bonus element of the fund plus any interest or growth on it returned
    to the government, and a small 5% charge applied.
    Last edited by masonic; 17-03-2016 at 1:17 PM.
    • TrustyOven
    • By TrustyOven 17th Mar 16, 7:36 AM
    • 726 Posts
    • 750 Thanks
    TrustyOven
    If payments can be added any time then this is an ideal savings plan for low paid and self employed people.?
    For many they simply can't commit to regular payment plans so anything from £0-4,000 a year with a bonus is a nice little earner..
    Even after 20 years you could build up a tidy sum paying in the maximum and that would be over £170,000 at 5% growth.
    Originally posted by coastline
    Warning: I've not had cofffee yet so brain is not at normal speed...

    I've just had a realisation... how will those with low pay be able to make that much use of this?

    On my previous job, earning about 27k before tax (so not low paid), my pension contributions of 5% were approx £117 per month. That's £1404 a year. And the employer matches...

    Are those on low pay able to pay 5%+ in pensions? Judging by some of the posts in the Auto-Enrolment forum here, some are not even able to cope with the minimum 1% contributions... on lower pay.

    Seems that they would never be able to approach the 4k annual limit of a LISA... Sure, they'd get 25% extra from the gov't, but they wont get anywhere near the 4k limit.

    Are people getting unduly excited about this LISA?
    Goals
    Save £12k in 2017 #016 (£4212.06 / £10k) (42.12%)
    Save £12k in 2016 #041 (£4558.28 / £6k) (75.97%)
    Save £12k in 2014 #192 (£4115.62 / £5k) (82.3%)
    • kingrulzuk
    • By kingrulzuk 17th Mar 16, 7:46 AM
    • 1,258 Posts
    • 568 Thanks
    kingrulzuk
    What can stop the government to move the goal post?
    What happens if you push this button?
    • cloud_dog
    • By cloud_dog 17th Mar 16, 8:19 AM
    • 4,274 Posts
    • 2,631 Thanks
    cloud_dog
    Off topic slightly....
    It does make me laugh (a little) because when the 'other' Government was offering free money to the young to encourage the benefits of savings it was baaaaad; now though its ok. Politics, eh.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
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