• Schofield

What Is A Lifetime ISA? How Could It Benefit Me?

An ISA is a savings account that the government offers to help us save tax-free. ISAs offer you protection from paying any income or capital gains tax on your investments, and they're a big part of the UK's tax-free savings system.


A lifetime ISA is a special type of ISA that allows you to get a free bonus from the government if you are saving towards your first home or retirement.


If you're between 18 and 40 then you can contribute up to £4k per year into a Lifetime ISA plus a 25% bonus from the Government, up to £1,000 per year, which is also tax-free.



Can you withdraw the money held in the Lifetime ISA?


At the age of 60, you are allowed to withdraw money from LISAs without penalty, or you can choose to keep it invested. However, if you are using the proceeds towards buying your first home, are terminally ill with less than twelve months to live you can withdraw earlier without penalty. You can also transfer a Lifetime ISA to another provider at any point.


If you want to withdraw your funds for any other reason, then you may have to pay a 25% charge on the ISA. To compensate for the fact that you are not using the Government free bonus money for one of the permitted purposes.


Pros and Cons of a Lifetime ISA


Pros:


- You can save up to £4,000 per year from age 18 – 40


- Up to £1,000 per year bonus free from the Government


- Tax free


- Can be invested over the long term


Cons:


- Can't withdraw before age 60 unless for buying a first home or you are terminally ill with less than twelve months to live.


- Eligible house purchases have price caps of £250,000 (£450,000 in London).


Investing with Schofield


There's some research that needs to be done before investing in an ISA. We at Schofield take the time to figure out your priorities and recommend adjustments so you can achieve the right balance of savings and spending.


Financial planning is a never-ending process. We understand that situations and priorities change over time, so our financial plans must also do so. That's why we meet with our clients on a regular basis to make sure we are in sync with their current challenges and problems as well as any longer-term goals they may have. Throughout the year, we keep track of any market fluctuations, new legislation, or tax updates so that we can give you the most up to date information possible.


Come and talk to the experts at Schofield. We can have a friendly chat about your future hopes and dreams and help you set up a financial plan that’s right for you.

Call us now on 01423 368000 or email us at enquiries@schofield.money

The value of any investment with Schofield Money will be directly linked to the value of the funds chosen. These may fall as well as rise, you may get back less than the amount invested. The bases and levels of taxation, and the reliefs from taxation can change at any time. They are usually dependent on individual circumstances.

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