In George Osborne’s 2016 Budget Speech, he unveiled plans for a new Lifetime ISA for under 40s, due to start in April 2017.
How does the Lifetime ISA work?
According to gov.uk, the Lifetime ISA will allow people between the ages of 18-40 to save up to £4,000 each year, and receive a government bonus of 25% – up to £1,000 a year.
What can you use the Lifetime ISA for?
Lifetime ISA users can use some, or all of the money to buy their first home, or keep it until they’re 60 to use as a pension.
First time buyers can use their Lifetime ISA savings and bonus towards a deposit on a home worth up to £450,000. If you want to use it to save for retirement, you can take out all the savings – tax free – after your 60th birthday.
Lifetime ISA – key facts
- The Lifetime ISA will be available from 2017
- You need to have the ISA open for at least 12 months before you receive any bonus
- When you turn 40, you can still save into it and will still receive the bonus, up to age 50
- Lifetime ISA users can save as little or as much as they want each month, up to £4,000 a year
- Accounts are limited to one per person rather than one per home, so if you’re buying a home with someone, two bonuses can be received
What does this mean for the Help to Buy ISA?
If you have one of these, you can transfer your savings from there into the Lifetime ISA when it launches in 2017. Alternatively, you can continue saving into both, however only one will bonus will be applicable when buying a house.
Read more about what 2016’s Budget Speech means for the property industry in our Budget summary.
Get on the property ladder with Kingsley Hamilton Estates. Call our expert team now on 020 7078 0214 or email us at firstname.lastname@example.org.