A new ISA is to become available from 6 April 2017, the new Lifetime ISA is aimed at young adults to start saving. This might be an ideal opportunity for parents wanting to assist their children in saving for a first time home. Or, it might indeed alleviate the need of the bank of Mum and Dad!
What is it?
Lifetime ISAs (also known as LISAs) are a new type of ISA designed to help people aged between 18 and 40 save up for their first home, or retirement. A LISA lets you save up to £4,000 per year. At the end of the tax year the Government will top up your ISA with a 25% bonus. You will be able to earn a 25% bonus on your LISA contributions up until the age of 50.
This means that if the full sum were to be contributed each year for the full term (until the age of 50) you would receive a bonus of £32,000.
There are rules that apply and withdrawals can be made at any time for other purposes but a 25% government withdrawal charge will be applied.
It could be an ideal way of saving for a first home and or retirement, as the account has to stay open with the hope that savers will continue to contribute to encourage a good saving attitude.
THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.
PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.