ISAs - Budget changes
Current Issues | Tax | 23rd March 2016
Lifetime Individual Savings Account
From 6 April 2017 a Lifetime ISA may be opened by adults under the age of 40. Contributions of up to £4,000 a year may be made and any savings put in before they are 50 will receive a 25% bonus from the Government.
Once the account has been opened for more than 12 months the funds held plus the Government bonus can be used to purchase a first home or withdrawn tax-free from the age of 60.
Although withdrawals may be made earlier for purposes other than to buy a home, the Government bonus will be lost as will any interest or growth on this. A 5% levy will also be charged. The Government is considering whether withdrawals may be made for other specified purposes without losing the bonus.
People may still also open a Help to Buy ISA until November 2019 but will only be able use the Government bonus from one of the accounts to buy their first home. During 2017/18 those who already have a Help to Buy ISA can transfer the savings into a Lifetime ISA, or continue saving into both.
Specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered above. If you would like advice or further information, please speak to your usual Shipleys contact.