Lifetime ISA- Up to £32k free cash from the tax payer

[hyphen]

So in todays housing Whitepaper, the lifetime ISA has been announced...

The deal: Save £4k a year and government(taxpayers) top it up by a 25% bonus. Up to a maximum of £32k free cash. Bonus is paid annually so you can receive cumulative interest on it.

To qualify- Be under 40 as of 6th April 2017

The catch: You can use it for two things. Either to buy a first home, or you can take it out after aged 60 tax free as retirement cash.

Bonus is only paid till you hit 50, so to get the max £32k you would need to be 18

http://www.moneysavingexpert.com/savings/lifetime-...

[danny0001uk1]

This has been announced for a while hasn't it?

I have a help to buy isa atm, think you can contribute more per year in a lifetime isa.

The best scheme is the starter home scheme buy a new build house with a 20% discount compared to your neighbour then after 5 years you can sell the house and don't have to pay the 20% discount back.

Edited by danny0001uk1 on Tuesday 7th February 16:52

Edited by danny0001uk1 on Tuesday 7th February 16:52

[scsracing]

So reading it right I can put in upto £4000 a year and the 25% bonus is paid yearly.

Hence if I bought a first home after Y1 I'd have 5k? (4k plus 1k bonus)

Say at point Y1.5 and you have 9k in the account (4k first year, 1k bonus first year, 4k second year) you bought a house would you get the 1k bonus for the 2nd year or only £500 as you withdrew at the Y1.5 point ?

Edited by scsracing on Tuesday 7th February 18:03

[dodgydave]

Bonus will be paid monthly after the first year.

[BoRED S2upid]

I'm getting bad de jar vu on this thread!

I don't trust this government or any other government in the next 20 years not to change this or move the goal posts so as a tool for saving for your retirement I'm oot! 25% bonus or not. I see a big chunk of cash lying in an account I can't access that's not getting any bonus!

[RenesisEvo]

Despite it getting closer and closer to the launch date, few if any banks are saying they will be offering one, in fact many look like they are shying away from it. I wonder what the reason is?

My question on these - I have two ISAs on the go at the moment, an 'old' cash ISA that's fixed for two years (no payments made in), and a Help to Buy ISA that I opened pretty much on day 1 of those being offered, and send the maximum contribution to each month. As I'm still aiming for a first time house purchase in the next 12-18 months, transferring the HTB to a Lifetime ISA isn't the best move, as I'll effectively be locked out for 12 months. What I would like to do is open a Lifetime ISA with the minimum amount, and not transfer my HTB ISA until the deadline for HTBs (a year later). However, this would mean I have 3 ISAs - is that possible? As I understand it, I can only pay into one ISA - so does opening a Lifetime qualify as paying into one, meaning I couldn't pay into my HTB in the same financial year (i.e would I be forced to stop contributing to the HTB for the 17/18 year)? Am I making any sense?

[ATG]

Let's give people a tax break to help them pump even more money into the housing market! Absolute madness. The objective should be to increase supply, not increase demand. If we are going to deploy tax breaks anywhere, the objective should be to reduce prices by lowering construction costs and encouraging supply.

[RenesisEvo]

ATG said:

Let's give people a tax break to help them pump even more money into the housing market! Absolute madness. The objective should be to increase supply, not increase demand. If we are going to deploy tax breaks anywhere, the objective should be to reduce prices by lowering construction costs and encouraging supply.

+1 I agree to a point - propping up the housing market is not the answer. I suspect there's too many people with too big an interest in keeping prices where they are so nothing is going to be done, despite the divergence of the wages against house prices. The average price needs to come down (increasing supply is one way, but not the only way).

[Downward]

So this is due to go live in a month.

No banks are touching it yet.

What happens about the age limit ? I'm 40 later this year, assume it's under 40 at 6th April ?

[Richieboy3008]

It worth getting one if your under 40 regardless. Just stick a fiver in it just so you've got it.

[98elise]

ATG said:

Let's give people a tax break to help them pump even more money into the housing market! Absolute madness. The objective should be to increase supply, not increase demand. If we are going to deploy tax breaks anywhere, the objective should be to reduce prices by lowering construction costs and encouraging supply.

I totally agree.

Any new initiative to fund the purchase just drives prices up because there is limited supply, so its self defeating. The government needs to stop messing about and tackle supply head on.

The changes to SDLT and BTL tax has been their only attempt, however its a smoke screen. If you have 10 families and 9 homes, then prices will rise regardless of who owns them. You ideally need a supply that meets demand in both the rental and owner occupier markets.

[essayer]

Richieboy3008 said:

It worth getting one if your under 40 regardless. Just stick a fiver in it just so you've got it.

I dismissed these originally because I pay into a SIPP, but I guess if in the future the SIPP doesn't make sense this would be a no-brainer.

£8 surely

Edited by essayer on Tuesday 28th March 14:49

[p1doc]

I am over 40 so cannot get but logged into Halifax to look at mortgage and reminder comes up that Halifax are not doing lifetime ISA, wonder why......

[FredClogs]

It seems non of the high street are going to do them with the exception of the Skipton I believe.

The exit fee is ridiculous, I can understand the government want to keep people in and if they don't hold the LISA until they're 60 then they want there money back, but to demand 25% of the entire fund back (all the capital appreciation on the 75% the saver has contributed) is a piss take.

If you're happy to lock money away until you're 60 then get a SIPP, you'll get the same "bonus" from HMRC.

I can see how it makes more sense for people saving for their first house.

[markcoznottz]

Socialist command economy, this money will be stolen, devalued, inflated, qe'd, bailed in or taxed at some point in the future.