LISA (Lifetime ISA), which was launched on April 6th , 2017, is a tax free account for saving towards a first home or pension, with a Government incentive whereby every £4 saved is increased to £5, up to a maximum of £4,000 saved per year, providing a £1,000 annual cash incentive. Even though it is intended for anyone between 18 and 40 years of age, contributions can be made until the age of 50, but only first time home buyers can use the scheme savings towards a deposit on a house.
As with a normal ISA, money or investments kept in the account are sheltered from tax. Any funds removed from the LISA before the age of 60, which are not being used towards a deposit on a first home, will be viewed as taxable income and a 25% withdrawal charge will be applied. Cash and investment ISAs can be held at the same time as the Lifetime ISA.
If you would like to learn more about the Lifetime ISA, and how it could benefit you, please ask us for more information.