New Lifetime ISA
31st May 2017
Business | Tax
The Lifetime ISA, available from 6 April 2017, can be accessed to put towards a first home or once the account holder turns 60. Under this savings scheme, adults under 40 years of age will be able to save up to £4,000 a year, with the government giving them a 25% top up on their savings.
Help to Save, which will follow the Lifetime ISA in 2018, is aimed at supporting people on low incomes to build up their savings. It carries a 50% government bonus on savings up to £50 a month for up to four years.
Help to Save will be available through NS&I to any adult who is receiving working tax credit, or Universal Credit with minimum household earnings equivalent to 16 hours a week at the National Living Wage. To encourage people to save as much as they can, the bonus will be based on the highest balance achieved in the account, not the standing balance.
Help to Save example – Saving the full £50 a month for two years would mean a bonus of £600 on £1,200 of savings
Lifetime ISA example – Savers will be able to contribute up to £4,000 every year and receive a bonus of up to £1,000 – they can withdraw the savings including the bonus to put towards a first home or leave them in the account, getting tax-free investment growth, until they reach 60.