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Lifetime ISA

11/10/2018

The Basics

What is a Lifetime ISA?

If you’re aged between 18 and 39, the Lifetime ISA offers a tax-free way to save – but with an appealing extra. You can save up to £4,000 a year and get a 25% top-up from the Government ie a free £1,000 a year. This account has been designed to be used either for the purchase of a first home OR for retirement.

In a nutshell

• You must be 18-39 to open one
• Save up to £4,000 a year
• Must be for a first home OR retirement
• Hefty withdrawal penalties

Is It Right For Me?

Good if you ...

  • Are sure you'll buy a property
  • Can save the full £4,000 a year
  • Want to access the stock market

Not Good if you ...

  • You're over 40, bah!
  • Might need access to this money
  • Want to stay in cash

People like you ...

LISA holders can earn a

25%

bonus from the government

The Numbers

The Benefits

  • Get a bonus of up to £1,000 a year ‘till you’re 50
  • That’s up to £32,000 free cash from the Government!
  • Great if you're convinced that you want to buy a house or that the money’s for retirement
  • The bonus is provided on exchange not completion
  • Access the stock market’s potential too
  • If your partner is also a property first-timer you can both use the LISA

The Detail


Help to Buy vs Lifetime ISA - Audio Guide

Help to Buy versus Lifetime ISA – Audio Guide

ISAs have been breeding like rabbits – there are more than ever to choose between. In this audio guide Holly and Georgie pit the Help to Buy ISA against the Lifetime ISA.


I have a Help to Buy ISA. Can I move it?

Yes you can. People generally consider moving if they want to access the stock market not just cash; or if they can save up to £4,000 a year and so benefit from the higher total free Government bonus. The big caveat is that there are no hefty withdrawal fees on the Help to Buy ISA if you change your mind and just close the account. There is a 6.25% penalty charge on all contributions you make into a Lifetime ISA if you withdraw the money and don’t use it for a property.


You can choose to transfer all, or just some of the Help to Buy ISA into a Lifetime ISA, as long as you don’t transfer more than the annual £4,000 LISA allowance during a single tax year (which runs from April 6th). If you have more than £4,000 in a Help to Buy ISA, you’ll have to stagger the transfer over more than one tax year and do it in two hits.


Also just remember that the Lifetime ISA needs to have been opened for at least 12 months before you can use it to buy your first home.


Beginner friendly!

If you are new to the world of investing then don't panic. Below are the 2 most user friendly choices which will get you on your way. 

Moneybox is a mobile app which is targeted at a younger audience than your stereotypical glof loving investor. The basic idea is that it allows you to round up your small everyday card purchases and put the balance into an ISA. Spend £4.55 in Boots? Round that up to a fiver and contribute 45p to the investment account. With simple choices – just three investment options - it’s a nice user experience. All-in costs are about 0.7% plus £1 a month.

Nutmeg is the other obvious contender for the less confident. This more established digital player takes users through a simple quiz to suggest which one of their ready-made portfolios might best suit you. With a helpful website and decent app it’s a decent option. All-in costs start from about 0.75% a year.

Where Can I Get One?

There are currently only a few Lifetime ISAs available. AJ Bell Youinvest has low charges and a broad range of investment options. Hargreaves Lansdown is great on service and a safe pair of hands if you want to gradually learn more about this stuff. Nutmeg is nice on mobile and the easiest of the three for less confident investors. See what other users have to say about them on our Best Buys pages. 

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The Detail

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