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  • FIRST POST
    • intalex
    • By intalex 9th Aug 18, 9:32 PM
    • 351Posts
    • 59Thanks
    intalex
    Talk of scrapping Lifetime ISA
    • #1
    • 9th Aug 18, 9:32 PM
    Talk of scrapping Lifetime ISA 9th Aug 18 at 9:32 PM
    If this were to happen, I wonder what it would mean for the 25% bonus already paid out
Page 1
    • Ed-1
    • By Ed-1 9th Aug 18, 9:37 PM
    • 2,428 Posts
    • 1,269 Thanks
    Ed-1
    • #2
    • 9th Aug 18, 9:37 PM
    • #2
    • 9th Aug 18, 9:37 PM
    If this were to happen, I wonder what it would mean for the 25% bonus already paid out
    Originally posted by intalex
    Any bonuses already paid out are public spending in the year they are made, so are highly unlikely to be retrospectively clawed back.
    • dunstonh
    • By dunstonh 9th Aug 18, 10:16 PM
    • 96,058 Posts
    • 63,875 Thanks
    dunstonh
    • #3
    • 9th Aug 18, 10:16 PM
    • #3
    • 9th Aug 18, 10:16 PM
    Historically, when tax wrappers have been abolished, they are either left in place with benefits retained but just wont accept new money any more. Or they are converted into the closest equivalent or replacement. Often they will be left in place initially and then converted years later.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Alexland
    • By Alexland 10th Aug 18, 5:25 AM
    • 3,817 Posts
    • 3,125 Thanks
    Alexland
    • #4
    • 10th Aug 18, 5:25 AM
    • #4
    • 10th Aug 18, 5:25 AM
    It would be a nightmare to claw back bonuses as many customers including myself have invested the money so they would be forcing customers or platforms to sell down holdings. That's never going to happen.

    If the Lifetime ISA is withdrawn then I would expect it to turn into a closed product with no further contributions allowed and the more established platforms such as HL or AJ Bell to treat their customers consistently with regard fees during the lockin period.

    It seems more likely the Lifetime ISA rules might simplify (maybe as part of a broader pension tax reform which governments usually explore then don't action) or there would be a roadmap to an alternative product

    My guess is that nothing much will change for several more tax years. The product should become more popular as the ability to open HTB ISAs is stopped next year.

    Alex
    • intalex
    • By intalex 10th Aug 18, 7:54 AM
    • 351 Posts
    • 59 Thanks
    intalex
    • #5
    • 10th Aug 18, 7:54 AM
    • #5
    • 10th Aug 18, 7:54 AM
    It seems more likely the Lifetime ISA rules might simplify
    Originally posted by Alexland
    Not sure what is complex about the product aside from lack of clarity whether its long term use is any better than pensions, which again depends on personal circumstances. No different to ISA vs non-ISA savings debate in light of the new personal savings allowance, which also depends on personal circumstances.

    Can't see what options they could consider to relax the rules, perhaps a few for short-term access:
    - Remove the 6.25% withdrawal surcharge if people change their minds about keeping the product
    - Raise/remove the price cap for first time property purchase
    - Allow it for 2nd, 3rd, etc property purchases (highly unlikely, I know)
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