UnaVida | The Lifetime ISA 1

The Lifetime ISA 1

The Lifetime ISA- The government have belatedly published draft legislation on how the Lifetime ISA will work. This means that savers can look forward to next April for the planned launch of the Lifetime ISA.

So from April anyone age over 18 and under 40 will be able to pay up to £4,000 a year into the Lifetime ISA and receive a bonus from the government of 25% of monies paid in.

You can continue paying until your age 50.

If you have a Help to Buy ISA you will be able to transfer this into the Lifetime ISA in 2017.

Beware of Penalties

You can take money out of the pot to put a deposit on a house or you are allowed to take monies out when you reach age 60.

The penalties for other withdrawals will be quite severe.

Although the government describes the exit penalties as small, they amount to 25% of whatever you take out (including the loss of any bonus and growth).

In reality (having read the small print) you may end up not only paying HMRC back the bonuses but also lose some of your monies as well.

Conclusion

This product is only worth considering if you are absolutely sure that you will use it for the penalty free withdrawal options of either using it as a deposit for a house or you can wait to withdraw monies at age 60. So unless you have access to other savings, then we think that this is a product to AVOID.

Registered in England and Wales. Registered Number 5553273.
Registered Address: 8f Millars Brook, Molly Millars Lane, Wokingham, Berkshire, RG41 2AD.

A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

UnaVida Wealth Management Ltd. is directly authorised and regulated by the Financial Conduct Authority (440577).

The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.