A lifetime Isa is a tax-free savings
account with a difference launching on the 6th of April 2017. They’ll only be
available to people aged between 18 and 39 and you’ll only be able to deposit up
to 4000 pounds each tax year. For every £4s you put into it, the government
will give you an extra pound towards either the purchase of your first
property or towards your retirement. That’s a maximum bonus of a thousand
pounds per tax year which you can claim every year until you’re 5. If you put
the money towards your first property, the property must be worth £450,000 or less. If you’re planning to put it towards your
retirement you’ll have to wait until you’re 60 to withdraw it. However if
you’re not a first-time buyer or you’re not willing to wait until you’re 60 to
access your savings a lifetime Isa is not the right type of Isa for you.
Although you can withdraw your money whenever you like, if you don’t use it to
buy your first property or for your retirement you’ll miss out on the
government bonus and any interest or growth on it. On top of that you’ll also
pay a 5% penalty. You can choose to open a lifetime Isa as a cash Isa
or a stocks and shares Isa. Remember you can only make new deposits into one of
each of these in every tax year and any deposits you make will count towards
your annual isa allowance which will be twenty thousand pounds in the 2017-18
tax year. Lifetime Isas arrived on the 6th of April 2017. For more information
visit which.co.uk/lifetimeisas