From 6th April 2017 a new type of ISA (Individual Savings Account) known as the LISA or Lifetime Individual Savings Account is available to open. The LISA is intended to help you save either towards your first home or towards your retirement. To qualify to open a LISA you must be aged between 18 and 39 years old (up until your 40th birthday).
The LISA is supplemented by a government bonus of 25% of the money you put in. You can save up to £4,000 a year, and after year one your bonus will be paid per month based on how much money you paid in. In the first year your bonus is paid as a lump sum at the end of the tax year. A LISA can hold stocks and shares qualifying investments or cash or a combination of the two.
If you intend to use the LISA towards a first home, you must do so after 12 months and your home must be purchased with a mortgage. If the LISA is intended for use with retirement you can access the funds after age 60. Like other ISA’s the funds can be accessed at any time for your use. However if it is not used within the bounds of either a first home purchase with a mortgage, or is you access the funds before age 60 a withdrawal charge will be incurred. If you like the sound of the LISA, seeking professional financial advice could help you to decide if it is right for you.
