A Lifetime ISA (LISA) is a dual-purpose ISA, designed to help first time buyers save a deposit for their first home and planning for their retirement.
You can open a LISA if you’re aged between 18 and 39. You can deposit savings of up to £4,000 each tax year, every year until your 50th birthday in either a Cash LISA or a Stocks and Shares LISA. So for every £4 you invest you will receive a £1 bonus.
“the government will pay an annual bonus of 25% on any contributions you make”
Subject to you investing your savings, the government will pay an annual bonus of 25% (capped at £1,000 p.a.) on any contributions you make. You can then withdraw your savings at least twelve months after you start saving to buy your first home worth up to £450,000. If you are buying jointly, then both purchasers are allowed to have a LISA each, enabling you both to benefit from the annual bonus incentive.
You can continue to use the LISA to save for your retirement after you have bought your first home.
You are allowed to make withdrawals that aren’t for your first house purchase prior to your retirement, but these will attract a 25% charge, so effectively you will forego the government bonus incentive.
So then, consider whether a LISA will help give you the bump you may need to your savings towards your deposit for your first home!
“you will need the aid of a solicitor to claim this incentive on your behalf”
When purchasing your new home, you will need the aid of a solicitor to claim this incentive on your behalf. The Team here at Thornton Jones Solicitors can assist you with using your LISA, and advise you on the rules and timeframe in which they must be used.
