If you plan to utilise this year’s £4,000 Lifetime ISA (LISA) allowance, you need to add money before the 2021/22 tax year end on 5 April 2022.
The government will add a further 25% to what you pay in. This means for every £4 saved, they will give you an extra £1 – up to £1,000 per tax year.
You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. You must be 18 or over but under 40 to open a Lifetime ISA.
You can put in up to £4,000 each year, until you’re 50. You must make your first payment into your ISA before you’re 40.
You can hold cash or stocks and shares in your Lifetime ISA, or have a combination of both.
Withdrawing money from your Lifetime ISA
You can withdraw money from your ISA if you’re:
• buying your first home
• aged 60 or over
• terminally ill, with less than 12 months to live
You’ll pay a withdrawal charge of 25% if you withdraw cash or assets for any other reason (also known as making an unauthorised withdrawal). This recovers the government bonus you received on your original savings.
Is the Lifetime ISA right for you?
A Lifetime ISA may not be right for you if you require any access other than to purchase your first home or retirement because there are restrictions around when you can withdraw your money.
Some ISAs are flexible, which means you can withdraw and pay back in throughout the tax year without affecting your overall annual ISA allowance. However, Lifetime ISAs are not flexible, so it will not be possible for withdrawals to be made and replaced without affecting your annual Lifetime ISA allowance or your overall ISA allowance.
If you’d like to discuss whether a Lifetime ISA would work for you, get in touch with our friendly advisers who will answer any questions you have on 0114 2588899. Our Independent Financial Advisers are qualified to provide advice in the areas of retirement planning, tax planning, savings, inheritance tax, investments and protection. Please remember that the value of investments may fall as well as rise in value.