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  • FIRST POST
    • MSE Helen S
    • By MSE Helen S 16th Mar 16, 5:06 PM
    • 75Posts
    • 44Thanks
    MSE Helen S
    Lifetime ISAs guide
    • #1
    • 16th Mar 16, 5:06 PM
    Lifetime ISAs guide 16th Mar 16 at 5:06 PM
    Hi!

    This is the discussion thread for the



    Click reply below to discuss. If you haven't already, join the forum to reply.


    Thanks folks,
    Last edited by Former MSE Andrea; 14-05-2018 at 1:33 PM.
Page 110
    • eskbanker
    • By eskbanker 29th Nov 19, 8:17 PM
    • 12,123 Posts
    • 15,030 Thanks
    eskbanker
    Does the 30th of November deadline apply to the LISA as well as the HTB ISA, or is it just the HTB?
    Originally posted by That debbie
    Just the HTB ISA; LISAs will continue to be available after that.
    • MMom
    • By MMom 14th Dec 19, 5:01 PM
    • 6 Posts
    • 1 Thanks
    MMom
    Hi all,
    My apology if this question has been asked before. I just opened my LISA account with moneybox and was approved today. My question is if there is any way that i can check my account balance with HMRC? I know we can know we can check on Mondaybox app but apart from that it could be nice that i can see the balance through HMRC account.

    Thank you and have a nice weekend
    • eskbanker
    • By eskbanker 14th Dec 19, 7:32 PM
    • 12,123 Posts
    • 15,030 Thanks
    eskbanker
    My apology if this question has been asked before. I just opened my LISA account with moneybox and was approved today. My question is if there is any way that i can check my account balance with HMRC? I know we can know we can check on Mondaybox app but apart from that it could be nice that i can see the balance through HMRC account.
    Originally posted by MMom
    To the best of my knowledge that question has never been asked before! I can't think of any reason someone would hope to use HMRC to check a balance on any account, but to desire to do so when using an app-based product seems even more counter-intuitive.

    So, the short answer is no - HMRC isn't provided with any data about savings accounts other than that which is relevant to tax calculations, which obviously excludes tax-free ISAs, and in any case would only be supplied to HMRC annually.
    • Bakerdale
    • By Bakerdale 16th Dec 19, 1:09 PM
    • 1 Posts
    • 0 Thanks
    Bakerdale
    Hi all - Iíve lurked on this forum for ages and this is the first time Iíve wanted to ask something that hasnít (as far as Iím aware) already been answered. Maybe that means itís a really silly question, but here goes!

    Iíve satisfied myself that a cash LISA is the right product for me, and Moneybox is obviously the best payer at the moment. But there is something troubling me about a product that is relatively unknown and entirely app-based. Even though it all seems above board and protected through the FSCS, is it really 100% safe? If something goes wrong, how would I prove I have money in the account if I have no paperwork - not even an annual statement? I feel as though Iíd be sending my £4K off into the ether!

    Apologies if it is indeed a silly question. I do want to be savvy and get the best product, but it took me a long tome to save £4K and I donít want to be worrying about it!
    • Prawman
    • By Prawman 20th Dec 19, 4:44 PM
    • 2 Posts
    • 0 Thanks
    Prawman
    This might be a dumb question, is the yearly 1k bonus applicable in every year (e.g 2019, 2020,...) or is it for each calendar year?

    In other words, which one is correct?
    A) I open a Lifetime ISA this December and pay in 4k, I get 1k bonus for year 2019, then I can pay another 4k in January to get the max bonus for 2020
    B) I open a Lifetime ISA this December and pay in 4k, I get 1k bonus, but this maxes out the bonus and I have to wait 365 days to get another 1k on my next 4k saving
    Last edited by Prawman; 20-12-2019 at 4:47 PM.
    • masonic
    • By masonic 20th Dec 19, 4:49 PM
    • 12,747 Posts
    • 10,248 Thanks
    masonic
    This might be a dumb question, is the yearly 1k bonus applicable in every year (e.g 2019, 2020,...) or is it for each calendar year?

    In other words, which one is correct?
    A) I open a Lifetime ISA this December and pay in 4k, I get 1k bonus for year 2019, then I can pay another 4k in January to get the max bonus for 2020
    B) I open a Lifetime ISA this December and pay in 4k, I get 1k bonus, but this maxes out the bonus and I have to wait 365 days to get another 1k on my next 4k saving
    Originally posted by Prawman
    Neither, like all ISAs, the Lifetime ISA is aligned with the tax year, which runs from 6th April - 5th April. You can pay in £4k on 5th April and another £4k on 6th April should you wish and be able to do so.
    • Prawman
    • By Prawman 20th Dec 19, 5:03 PM
    • 2 Posts
    • 0 Thanks
    Prawman
    Thanks for the quick reply. My follow-up question is, when is the bonus calculated/applied, is it tied to the tax year as well?
    • eskbanker
    • By eskbanker 20th Dec 19, 5:52 PM
    • 12,123 Posts
    • 15,030 Thanks
    eskbanker
    Thanks for the quick reply. My follow-up question is, when is the bonus calculated/applied, is it tied to the tax year as well?
    Originally posted by Prawman
    No, it's only the deposit allowance that's aligned with tax years; the bonus is paid at 25% of each and every contribution, within 4-8 weeks of the deposit, regardless of which tax year the money is paid in.
    • JonHeath1980
    • By JonHeath1980 21st Dec 19, 10:37 PM
    • 2 Posts
    • 0 Thanks
    JonHeath1980
    Hi,

    I've tried to do the research to decide whether a LISA is the right thing for my circumstance but could do with a bit of advice please.

    I'm 40 in May 2020, so I'm looking at now or never regarding a LISA.

    I already pay into my work pension and already get the maximum match from my work. However I'm able to pay in as much % into my pension as I want.

    I'm in the higher rate tax band.

    So should I:

    a) pay £4000 per year into a LISA for the next 10 years...and then sit on that until I'm 60.

    b) I up my pension contribution by £4000 per year, meaning I avoid the higher rate tax on that now, but I'd still pay 20% tax on it when I get it later on in life

    with option a) I'd pay into the LISA for 10 years then from years 11-20 I'd up my pension.

    Any help greatly appreciated!

    Jon
    • eskbanker
    • By eskbanker 22nd Dec 19, 12:31 AM
    • 12,123 Posts
    • 15,030 Thanks
    eskbanker
    There isn't a simple answer to that....

    You can do the maths to work out which is likely to be best from a straight financial perspective, which will entail greater knowledge of exactly how money would flow from employer to pension, i.e. NI savings, salary sacrifice, etc (which mean that in reality you won't be comparing £4K into pension with £4K into LISA, as the former would typically be from gross income and the latter net), plus more detail about how much of your pension might not be taxed at 20% (either above or below) in retirement.

    There's also the matter of where the money will be invested and what the charging regime is - chances are that you'll have less say in where the pension money is invested and that it'll be more expensive than a LISA.

    Then there are softer issues to factor in, such as pension money being accessible at 55 rather than 60 for the LISA, together with it being ring-fenced away from available assets in the event of needing to claim benefits or secure care funding in future.
    • Tom99
    • By Tom99 22nd Dec 19, 2:10 AM
    • 5,211 Posts
    • 3,673 Thanks
    Tom99
    Hi,
    I've tried to do the research to decide whether a LISA is the right thing for my circumstance but could do with a bit of advice please.
    I'm 40 in May 2020, so I'm looking at now or never regarding a LISA.
    I already pay into my work pension and already get the maximum match from my work. However I'm able to pay in as much % into my pension as I want.
    I'm in the higher rate tax band.
    So should I:
    a) pay £4000 per year into a LISA for the next 10 years...and then sit on that until I'm 60.
    b) I up my pension contribution by £4000 per year, meaning I avoid the higher rate tax on that now, but I'd still pay 20% tax on it when I get it later on in life
    with option a) I'd pay into the LISA for 10 years then from years 11-20 I'd up my pension.
    Any help greatly appreciated!
    Jon
    Originally posted by JonHeath1980
    How about this comparison, £4,000 net to invest and you are a higher rate taxpayer:

    Money going in:
    Pension - £4000 in = £6,667 pot.
    LISA - £4000 in = £5,000 pot.

    Money coming out:
    Pension if still 40% taxpayer = £6,667x25% + £6,667x75%x60% = £4,667.
    Pension if then a 20% taxpayer = £6,667x25% + £6,667x75%x80% = £5,667
    LISA £5,000x100% = £5,000

    If you expect to be a basic rate taxpayer when you draw down the pension then the pension will give you a better return than the LISA but if you expect to still be a higher rate taxpayer then the LISA is a better option.
    • eskbanker
    • By eskbanker 22nd Dec 19, 10:37 AM
    • 12,123 Posts
    • 15,030 Thanks
    eskbanker
    If you expect to be a basic rate taxpayer when you draw down the pension then the pension will give you a better return than the LISA but if you expect to still be a higher rate taxpayer then the LISA is a better option.
    Originally posted by Tom99
    But Jon isn't comparing a LISA with paying into a private pension from net pay, so the basis on which the workplace pension is funded needs to be taken into account, as this can affect the comparison....
    • MDMD
    • By MDMD 22nd Dec 19, 12:09 PM
    • 493 Posts
    • 391 Thanks
    MDMD
    Some arithmetic on this post:

    https://forums.moneysavingexpert.com/showthread.php?t=5794388#10

    Four other points to bear in mind:

    An ISA (of any type) isn’t always tax free if you become tax resident outside the UK. This can be a particular issue in the US due to their PFIC rules. A pension is generally treated as exempt under most tax treaties

    Pensions are disregarded for state benefits eligibility

    Pensions are generally ignored as part of an estate on death

    There is a much wider choice of platforms who offer pensions compared to LISAs
    Last edited by MDMD; 22-12-2019 at 12:12 PM.
    • JonHeath1980
    • By JonHeath1980 23rd Dec 19, 4:21 PM
    • 2 Posts
    • 0 Thanks
    JonHeath1980
    Thanks for the replies, they've been really helpful.

    The link to the arithmetic on the post above was particularly helpful. This indicates putting into a pension works out better for the majority, but would be even more so for me as I'm in the higher rate of tax?

    I can't see me getting into a £50000+ annual pension drawdown situation so the higher rate of tax shouldn't come into play in later life for me, so for me investing in a pension just seems like a better option than a LISA.
    • jdlak
    • By jdlak 25th Dec 19, 2:01 AM
    • 1 Posts
    • 0 Thanks
    jdlak
    RE: First time buyer with 25% 'ownership' in another residential property?
    Hello all


    My parents recently divorced and my mother gave her 50% share of the property that she had once owned to myself and my sibling. Therefore, I 'own' 25% of a property. I wasn't asked to sign anything, which I find quite strange. I have never seen any declaration of trusts or any document which details the legality of my ownership (i.e. whether I have legal interest or beneficial interest, etc).



    Am I still classed as a first time buyer, for the purposes of the LISA? I don't want to sink a significant amount of money into the LISA and then find out I am ineligible and face the 25% penalty for withdraw.



    Many thanks


    J
    • masonic
    • By masonic 28th Dec 19, 4:31 PM
    • 12,747 Posts
    • 10,248 Thanks
    masonic
    My parents recently divorced and my mother gave her 50% share of the property that she had once owned to myself and my sibling. Therefore, I 'own' 25% of a property. I wasn't asked to sign anything, which I find quite strange. I have never seen any declaration of trusts or any document which details the legality of my ownership (i.e. whether I have legal interest or beneficial interest, etc).
    Originally posted by jdlak
    This is information you would need to find out in order to understand whether you really have a legal interest in the property, or whether you've just been told that. It seems like something it would be a good idea to establish beyond your eligibility for a LISA withdrawal.

    Am I still classed as a first time buyer, for the purposes of the LISA? I don't want to sink a significant amount of money into the LISA and then find out I am ineligible and face the 25% penalty for withdraw.
    If you really have been gifted a 25% share of your parents' property then you wouldn't be eligible. It would be sensible to assume this is the case until you can confirm who really owns your parents' property.
    • kiwi_fruit
    • By kiwi_fruit 28th Dec 19, 11:50 PM
    • 785 Posts
    • 345 Thanks
    kiwi_fruit
    Should I still go for LISA S&S if very risk averse
    I'm thinking of getting LISA for retirement savings. I'm 32, so it would be for 28 years. Keep reading that leaving savings in cash for this amount of time is very unwise( inflation etc) and anybody wanting to save very long term should go for Stock and Shares as it's "guaranteed" to outperform cash. But surely investments are never guaranteed and always a gamble so a loss is a possibility? Does the fact that's it's long-term makes it any less of a gamble? I'm hugely risk averse and the thought of losing savings fills me with dread, how much of a gamble would this long term S&S LISA be?


    Any another thing is I've have stumbled upon articles saying that government could abolish it as it's not performing like expected etc. If they do- what are the chances they'd discontinue 25% bonus AND not let you withdraw early?
    THANK YOU for any input in advance
    Last edited by kiwi_fruit; 28-12-2019 at 11:53 PM.
    • masonic
    • By masonic 29th Dec 19, 6:53 AM
    • 12,747 Posts
    • 10,248 Thanks
    masonic
    I'm thinking of getting LISA for retirement savings. I'm 32, so it would be for 28 years. Keep reading that leaving savings in cash for this amount of time is very unwise( inflation etc) and anybody wanting to save very long term should go for Stock and Shares as it's "guaranteed" to outperform cash. But surely investments are never guaranteed and always a gamble so a loss is a possibility? Does the fact that's it's long-term makes it any less of a gamble? I'm hugely risk averse and the thought of losing savings fills me with dread, how much of a gamble would this long term S&S LISA be?
    Originally posted by kiwi_fruit
    It's not guaranteed. It's just extremely likely. Cash held over long periods of time is almost guaranteed to lose money in real terms, whereas a global investment portfolio has only a negligible chance of losing money. In the last 100 years or so, there has never been a 30 year period where staying in cash would have been given a better outcome than investing globally in a mixture of S&S and bonds - and most of that time, cash interest rates were higher than today.

    You should check that a LISA makes sense for you vs the pension options you have available. Things like employer matching and salary sacrifice can tip the balance strongly in favour of using a pension.

    Any another thing is I've have stumbled upon articles saying that government could abolish it as it's not performing like expected etc. If they do- what are the chances they'd discontinue 25% bonus AND not let you withdraw early?
    THANK YOU for any input in advance
    It is unlikely LISAs will be abolished, and with the demise of the HTB ISA, they are likely to become more popular. There are lots of rumours like this that seem to circulate year after year - like the abolishing of higher rate tax relief on pensions.

    The 25% bonus on LISAs is paid 1-2 months after each deposit into the LISA, therefore even if this was stopped at some point in the future, you could simply stop paying into the account and switch back to contributing to a pension. If they did allow penalty free access at that point, that would be the icing on the cake, but taking away bonus money already paid is about as inconceivable as taking away tax relief people have already been granted for contributing to their pensions.
    Last edited by masonic; 29-12-2019 at 6:57 AM.
    • kiwi_fruit
    • By kiwi_fruit 29th Dec 19, 2:43 PM
    • 785 Posts
    • 345 Thanks
    kiwi_fruit
    masonic, thanks very much for your sensible and reassuring response.
    I'm self-employed, don't have a company pension, so LISA theoretically does make a lot of sense for me. My other half says the only gamble here is if interest rates were to go up considerably and not being able to move LISA money to a better rate, especially in the last ten years when the bonus rates stops.
    • masonic
    • By masonic 29th Dec 19, 3:11 PM
    • 12,747 Posts
    • 10,248 Thanks
    masonic
    masonic, thanks very much for your sensible and reassuring response.
    I'm self-employed, don't have a company pension, so LISA theoretically does make a lot of sense for me.
    Originally posted by kiwi_fruit
    It would make sense for some of your retirement savings - remembering that there are certain disadvantages of LISAs, such as they are included in means testing and cannot be disregarded if bankruptcy proceedings were ever brought against you.

    For income taken in retirement above your pension's tax free lump sum and above your personal allowance, a LISA funded from income taxed at the basic rate will be more tax efficient than income from your pension.

    My other half says the only gamble here is if interest rates were to go up considerably and not being able to move LISA money to a better rate, especially in the last ten years when the bonus rates stops.
    This wouldn't be a gamble at all, since we've already established it would make no sense to choose a cash LISA vs a S&S LISA.

    S&S LISAs do not pay any interest on cash balances, and all providers give sufficient investment choice for you to reduce your investment risk in the years leading up to you accessing the money, depending on your plans for retirement and your LISA's role in those plans. Your returns will therefore come exclusively from the investments you hold within the LISA, and the main factors to consider about the provider is their charges and the investments they have on offer. While charges could be hiked at some point, they are unlikely to become decoupled with charges for S&S ISAs and general investment accounts, so should remain competitive. Once you reach 60 years of age, you'd be free to transfer the money to a combination of cash/S&S ISA, withdraw some of it and place it in a standard savings account, etc. What makes sense at that time will heavily depend on whether you are already retired, intend to retire at that time, or plan to work for some time more before retiring. It will be quite some time between then and when the state pension kicks in.

    There is perhaps some further misunderstanding from your other half as there is no 'bonus rate', as such, on LISAs. You get a one-off 25% bonus paid on new money paid into the account. You will receive that bonus precisely once on every contribution you make up to the age of 50, whereupon you will be unable to pay anything further into the account. While it is true money paid in just before you turn 50 will attract a higher bonus rate since you'll get the same 25% even though you only need to keep the money in the account for 10 years vs the ~28 years you'll be locking up money paid in today, it's probably better to consider it as being equivalent to 'cashback' rather than a 'bonus rate' if it must be thought of in terms of savings products.
    Last edited by masonic; 29-12-2019 at 3:28 PM.
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