Who is it suitable for?
The lifetime ISA (LISA) is available to any UK resident aged between 18 and 40 and can be opened alongside or instead of a standard adult ISA, with contributions possible until the age of 50.
It has an annual contribution limit of £4,000 which counts towards the total annual ISA limit of £20,000 per annum per person.
Benefits?
In addition to the 25% government bonus of £1,000 based on a maximum contribution of £4,000 per year, any investment income and growth on investments held within the LISA is not subject to UK income or Capital Gains Tax.
LISAs can hold both cash and stocks and shares. By choosing a LISA with Killik & Co and investing into a range of investments such as stocks, funds, or bonds, you can give your savings the opportunity to work harder than cash savings.
Capital at Risk
Please remember as with all investments your money can rise and fall. Performance is not an indicator of future returns. Tax treatment depends on the individual circumstances and may change in the future.
The rules
There are restrictions on withdrawing money from a LISA without being subject to a penalty, so it is important to ensure this fits in with your goals.
You can withdraw money from your LISA for one of the following reasons, without being subject to paying the 25% penalty.
To put towards purchasing your first home:
- It must be your first property, located within the UK, it must be mortgaged and must not cost more than £450,000
- The LISA must have been opened for at least 12 months for you to receive any government bonus
- The bonus is per individual, so two first-time buyers can combine their government bonus when buying a property together
For your retirement:
- You can access the money tax-free on or after your 60th birthday
- The LISA can work alongside your pension
The LISA may also be accessed If you are terminally ill with less than 12 months to live.
*If money is withdrawn for any other reasons (known as an unauthorised withdrawal), it is subject to the 25% government penalty. You can learn more about Lifetime ISA restrictions and exemptions on gov.uk here.
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