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The Lifetime ISA

The Lifetime ISA post image

The ISA has long been an incredibly attractive way for UK investors to shield their investment income and capital gains from all taxes.

The annual contribution limit has risen over the years, too. From 6 April 2017 you’ve been able to sock away £20,000 a year.

Some or all of that allowance can now go into an Innovative Finance ISA. Similar to a cash ISA, this enables you to shelter the higher income you can get from peer-to-peer platforms from tax (although big boys Ratesetter and Zopa have yet to win approval for theirs).

The ISA has also become a weapon of redistribution, albeit one with a distinctly Tory slant.

First came the Help to Buy ISA, which tops-up the savings of first-time buyers. Help to Buy ISAs became available in late 2015.

And then 6 April 2017 saw the launch of the Lifetime ISA – also known as a ‘Lisa’.

The Lifetime ISA / Lisa enables young (and young-ish) people to save up to £4,000 every year into a special new ISA wrapper. This money is then boosted by the Government by 25%.

  • For example save the maximum £4,000 and they’ll give you £1,000. That would mean £5,000 went into your Lifetime ISA that year.

The money in your Lifetime ISA grows tax-free, as with normal ISAs. It can later be used to buy your first home or else be put towards retirement.

Here it is illustrated in one official government graphic:

(Click to enlarge your Lifetime ISA options!)

This graphic is actually a bit misleading. It implies the bonus is static, whereas the Treasury’s own documents make clear the bonus becomes part of your total Lifetime ISA pot that compounds over the years. Also, from April 2018 the bonus will be added monthly.

Anyway, free money growing safe from taxes sounds great, right?

Well, it might be, but complications abound with the deceptively simple Lifetime ISA and there are harsh penalties if you stray off-piste.

In this article we’ll dive into the detail of the Lifetime ISA. In the follow-up I’ll look at who should make the Lifetime ISA a big part of their savings strategy, and who should probably not.

(Spoiler alert: I think everyone who can open a Lisa should do so, but in many cases with just the minimum contribution allowed. For example Hargreaves Lansdown will let you open one with just £100. This way you have it should your circumstances change, even after you’re too old to be allowed to open a new one).

The Lifetime ISA explained

Let’s run through the key points.

Opening a Lifetime ISA:

  • You must be aged between 18 and 39.
  • You must be a UK resident.1
  • You can only open one Lifetime ISA per person, per tax year.2

You can open a Lisa if you’re just one day shy of your 40th birthday (and as mentioned I think you should).

After that, computer says no.

How much can you put in?

  • You can save up to £4,000 a year into your Lifetime ISA(s).
  • Any cash you put in it before your 50th birthday will receive an added 25% bonus from the government.
  • The first government bonuses will be paid into your Lifetime ISA account in April 2018.
  • From then on bonuses will be paid monthly.
  • Once in your Lisa, the bonus earns interest (or can be invested) just like the money you contribute yourself. This nicely increases the total pot you’re compounding.
  • For the 2017-18 tax year only, you can transfer savings you’ve built up in a Help to Buy: ISA into a Lifetime ISA in that year and still save up to £4,000 into your Lifetime ISA and get the government bonus.3 See MoneySavingExpert for some ideas on timing.
  • You can save into a Lisa until the day before your 50th birthday. After that it can remain invested, but you can’t put new money in (and you’ll get no more bonuses).

The showstopper attraction then is you get an added £1 for every £4 you put into the Lifetime ISA per year, up to the £4,000 limit.

That’s much better than with a normal ISA, where you pay in taxed money and get no extra top-ups.

Indeed it’s free money – always the safest return.4 For the youngest Lifetime ISA savers, it could add up to tens of thousands of pounds of bonus payments over the decades (presuming the scheme survives.)

If you begin at age 18 and you save the full £4,000 a year, then at 50 you’d have saved £128,000 and enjoyed £32,000 of top-ups. (And that’s just the money that’s gone in, before any growth…)

There are no minimum or maximum monthly contributions to the Lifetime ISA. You should be able to save whatever you want each month, up to the £4,000 a year limit.

What about my other ISAs?

The larger £20,000 annual ISA limit applies across all your ISAs – Lifetime ISA, Help to Buy ISA, Innovative ISAs, and, um, Bog Standard ISAs.

For example, if you put the full £4,000 in a Lifetime ISA, you have £16,000 of your allowance leftover for the rest of the ISA gang that year.

How can I invest my Lifetime ISA money?

Qualifying investments for a Lifetime ISA are the same as for a normal ISA. Cash, shares, bonds, investment trusts, ETFs, funds – all should be fair game.

This means that unlike with a Help to Buy ISA (which is limited to cash) as a Lifetime ISA owner you can take your government-sourced money and pump prudently invest it into shares.

However there’s a snag. In theory, all those assets I listed can be held in a Lifetime ISA – but currently there are no cash Lifetime ISAs available.

This is a pretty strange state of affairs, and it won’t last if the Lifetime ISA survives.

In the meantime, if you are risk averse (perhaps because you think you’ll need the money in a few years for a house and you don’t want to risk the ups and downs of the stock market) you could perhaps open a Lifetime ISA that’s meant for shares, and invest your money and the bonus in a short-term bond ETF.

Or you could just wait for cash Lisas to become available.

How you can use your Lifetime ISA

At last the good bit! You can use the money in your Lifetime ISA in two different ways:

To buy your first home

  • Your savings and interest and the government bonus – all compounded together over the years – can be put towards a deposit on your first home. This property can cost up to £450,000, anywhere in the country.5
  • If you’re in a couple you can both receive the Lifetime ISA bonuses before buying together, as ISAs and top-ups are limited per person rather than per home. The maximum house price remains £450,000 for a couple, though.
  • If you have a Help to Buy ISA you can transfer those savings into your Lifetime ISA in 2017-18, or else continue with both. However you will only be able to use the bonus from ONE of these two kinds of special ISAs to buy a house, which could lead to fiddly complications or decisions down the line.

This last point begs the question of what else to do with your Lifetime ISA money if you don’t buy a house?

Aha! That brings us to the second permitted use…

Put it towards your retirement / later fund

  • After your 60th birthday you can take out any or all the savings in your Lifetime ISA, tax-free.

The official line is you will be able to leave the money invested if you want to after you’re 60. You should also be able to transfer your money to another type of ISA.

For example, perhaps Innovative Finance ISAs will be providing would-be retirees with a steady tax-free income and various safeguards in two decades time?

Frankly, who knows what the landscape will look like in 20 years. (Just one reason why constant government tinkering is unhelpful. It adds more uncertainty.)

Assuming the ISA regime survives until 2037 and beyond, I expect that when the first Lisa owners hit 60 there will be lots of options.

What if I don’t buy a house and I want the money before I’m 60?

Now we come to the big sting in the tail – the potential penalty charges.

You can withdraw your Lisa money without a charge if:

  • It’s to go towards your first home costing up to £450,000, and it’s been 12 months since you first started saving into the Lifetime ISA.
  • Or you’re over 60.
  • Or you’re terminally ill.

Otherwise, you face a penalty.

  • You will have to pay a withdrawal charge of 25% if you take out money at any time before you turn 60 (unless it’s to buy a qualifying house).

This charge is tougher than you might first think.

Some will see a 25% charge as simply clawing back the 25% Government bonus.

But this is not right. Here’s the maths:

Put in £4,000
Get £1,000 bonus (that is, a 25% boost).
You now have £5,000
Withdraw early, for non-permitted reasons
Take a 25% charge = 25% of £5,000 = £1,250
£5,000 – £1,250
= £3,750

You are left with less money than you put in! (6.25% less to be precise, which is the true penalty for withdrawing after taking into account the bonus).

This is a simplified example. There’s a 30-day cooling off period when you open a Lisa, and there will be no exit penalties charged in this first year. Over sensible time periods there’d hopefully be some growth in your money.

But the principle holds. You might find you have to withdraw money early – and the freedom to do so, even with a charge, is attractively flexible compared to a locked-up pension – but you really don’t want to if you can help it.

If you start a Lifetime ISA, you need to be as confident as possible that you will abide by the rules: Buy a first home with the money, or no withdrawals until 60.

Where can I get a Lifetime ISA?

Only a few providers are offering them so far. Right now Hargreaves Lansdown, Nutmeg, and The Share Centre. That’s your lot.

Seems odd, doesn’t it? Former chancellor George Osborne announced the Lifetime ISA back in the 2016 Budget. Plenty of time for platforms to get on-board – especially when they can dangle carrots of free cash from the government in front of savers.

Theories for the tardiness abound:

  • Perhaps the new HMRC reporting regime for Lifetime ISAs is proving onerous?
  • The first lump sum top-up from the government won’t be paid until the end of the year, so what’s the rush?

Then there’s my theory, which is that the Lifetime ISA is such a muddle that firms presumed it would be scrapped before launch. (A tad naive when it comes to finance, perhaps. When has confusion ever stayed the industry’s hand?)

Don’t get me wrong. The Lisa has its attractions. The initial pros and cons aren’t going to be hard for a typical Monevator reader to figure out.

However extrapolating them over an uncertain 10-30 year time horizon is harder.

Meanwhile the average young person is likely to be bamboozled from the outset.

Should you open a Lifetime ISA?

At first glance, the Lifetime ISA sounds like a Help to Buy ISA with a personality disorder, but that doesn’t mean it’s not worthy of close attention.

As it can only opened by those aged 18-to-under-40, it seems to be aimed at helping the finances (and winning the votes) of a younger generation that has seen job security, affordable housing, and generous final salary pensions disappear over the horizon.

Whether the Lifetime ISA is the best way to address wealth inequality across the generations is a topic for another day.

But if you’re young enough to qualify and you have money that you’re committed to locking away either to buy a home or for your retirement, you should give serious thought to opening a Lifetime ISA.

As I say I would definitely open one if I were under 40, even if it was only to put £100 into it. Once it’s opened, you have the option of using it once you’re over 40, and who knows how your circumstances might change? Don’t open it, and the door closes on your 40th birthday.

All that said, weighing up whether you should be directing money towards a pension (particularly a workplace pension with super valuable employer contributions), a Lifetime ISA, a Help to Buy ISA, a normal ISA, or some other form of savings will be complicated for many people.

Not least because the two uses permitted – buying a home when young, and saving for when you’re old – entail very different investing decisions.

And also because of that exit penalty, of course.

In the next post we’ll see exactly who the Lifetime ISA might be good for, and who should say “no thanks”, and back away slowly.

Note: I’ve updated this post with all the latest on the Lifetime ISA. Older comments below this post may date back to its launch. Many are still relevant, but keep that in mind.

  1. Or a member of the armed forces serving overseas, or their spouse or civil partner []
  2. Each time you apply for a new Lifetime ISA you’ll need to meet those first two criteria. After your 40th birthday, no more new Lifetime ISAs for you! However you can continue to contribute to your existing ones until you’re 50. []
  3. Alternatively you can keep saving into both schemes. However note you will only be able to use the bonus from one of the ISA types to buy a house! []
  4. Okay, it’s not totally free as the government must get the money to top-up from somewhere, via taxes. But if you’re young it will probably be coming from taxing someone older. []
  5. Unlike the Help to Buy ISA, which has different limits inside and outside of London. []

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{ 136 comments… add one and remember nothing here is personal advice }
  • 101 dearieme April 18, 2017, 5:34 pm

    Consider someone who’s reached a high salary quite young, is now limited to a £10k p.a. pension contribution and is conscious of having ignored pensions during his rapid rise. Or, alternatively, has contributed quite a bit in the past and is becoming aware of the LTA.

    Being able to put £5k gross p.a. into a LISA effectively raises his pension contribution by 50%, leaves his LTA undisturbed, and carries the promise of a little chunk of untaxed income later in life.

    How many such people there are, and whether they’d bother with trifling £5k p.a., I could not say.

  • 102 The Rhino April 18, 2017, 6:25 pm

    I think 10k annual allowance implies 210k income so as you say the LISA is neither here nor there in that circumstance

  • 103 ivanopinion April 18, 2017, 7:31 pm

    @The Rhino
    The Share Centre charges £57.60 for its ISA, so probably the same for its LISA. But 1% dealing fee, which is ridiculous.
    HL’s 0.45% is £18 on a £4000 ISA (and I assume the same for a LISA), so not bad for now. In year 3, it would be £54 (plus or minus any growth in the portfolio), but at that point you could switch to ETFs and the fee is capped at £45, which again isn’t bad. Or you could transfer to another LISA provider (who might well refund any exit charges from HL).

  • 104 Alex P April 18, 2017, 7:45 pm

    @Rhino – Youinvest say they are going to open one up later this year, but when I have spoken to them they cannot say when. I turn 40 in June so I opened mine with HL, but I’ll be moving it once a cheaper option becomes available…

  • 105 The Rhino April 18, 2017, 7:48 pm

    @IO – that sounds like a reasonable assumption for share centre, and you’re right, it makes no sense. HL is the obvious choice for now, that said, nutmeg claims to have no exit charges..
    I’m just in the process of terminating my HL account – I really have timed this quite badly – Its not like I can claim not to have known, just wasn’t concentrating hard enough

  • 106 The Rhino April 18, 2017, 8:05 pm

    I.e. in a completely unnecessary mad-dash I’ve burned up the whole ISA allowance in my last eligible year for LISA membership whilst at the same time closing my account with the only provider worth holding a LISA with..
    Only time will tell whether it was fate on my side guiding me away from a govt shaft, but more likely I’ve just tossed 10k in the bin..

  • 107 Vanguardfan April 18, 2017, 8:41 pm

    @rhino – why not try halting your transfer from HL and see if it’s possible to do a partial transfer from your ISA into the LISA? Worth at least talking to HL about it, see if their legendary customer service is worth it – and what have you got to lose? (Well, that’s easy – £10k plus!)

  • 108 The Rhino April 18, 2017, 8:48 pm

    @VF HL transfer is a SIPP not an ISA, thats all I had left with them
    I’m pretty sanguine to be honest, I don’t really want one. They fail my Occams Razor test.
    I’m hoping the next TI article will outline how they’re terribly unsuited to me anyway 😉

  • 109 JonWB April 18, 2017, 9:09 pm

    @TheRhino – Yes. 20K max across all ISAs. You might be able to withdraw up to £4,000 from an ISA to repatriate to LISA in the same tax year. This does not need to be a direct transfer but using the flexibility they introduced to avoid the delays on ISA to ISA transfers. If you are a client I would give HL a call – they are excellent at providing written answers to this sort of thing from an in house expert and often have direct access to the expert at HMRC.

    I would only do this if the ISA and the LISA were with the same provider and they were happy to accept it. All ISA managers report subscriptions via National Insurance number so you need to be certain that they will only report £20K and not £24K.

    @All – The biggest drawback I can think of with a LISA is that gains are likely to be taxed as an ISA in any foreign jurisdiction, rather than as a pension which is what the product purports to be if not used for a first time house purchase. That could see someone having to make a penalty withdrawal to settle the tax due with no certainty that an exit penalty would be included in a double taxation treaty calculation. You can mitigate a little with trackers – no need to crystalise while overseas – but there is always a risk the index provider could force a crystalisation event if they delist the security.

  • 110 Wagas April 19, 2017, 5:43 am

    If you’ve used up this years ISA subscription you can’t do a partial transfer to the LISA. You can only transfer the full balance you’ve put in this year. So if you’ve put in £20k already you can’t transfer £20k into a LISA so it’s not possible.

    For me the LISA is excellent as I’m an FTB and also self employed so no employer pension contributions. The LISA is therefore pretty much tailor made for me.

    I actually think it’s pretty good for everyone for one reason: The government can’t stop meddling with pensions. Who’s to say in the future salary sacrifice won’t be restricted? Tax relief reduced or annual contribution allowance reduced? You’ll probably be glad that you opened a LISA.

    It’s also worth noting that the government can spring a positive surprise. Who’s to say they won’t scrap the LISA withdrawal penalty in the future or increase the ‘free money’. Or make it better in some way.

    When I opened the HTB ISA it was pointless because of the £200 monthly pay in limit and the restriction to buy a house for up to £250k. I only opened it because I was trying to build up cash and had maxed out high interest bank accounts and reg savers. Well now I’ve got £4k in it earning 3.5% net interest and can transfer it to a LISA without using up the £4k allowance and have the flexibility of now putting it in equities and can also use it to buy a house for up to £450k. So sometimes products can change significantly for the better.

  • 111 hosimpson April 19, 2017, 7:31 am

    My plan is to wait and see. There’s time to use this year’s LISA allowance until April 2018. I’m looking forward for the follow-up article.

  • 112 ivanopinion April 19, 2017, 11:13 am

    Yes, for anyone who is likely to go to live abroad at some point, it is worth bearing in mind that a LISA is unlikely to have any overseas tax protection. The 25% top ups from the government that have already been received will not be affected, but the country where you are tax resident will almost certainly disregard the LISA tax wrapper, so any income or realised gains on the underlying portfolio will almost certainly be taxable at local rates.

    It is even possible that some countries will tax you on unrealised gains, for instance by taxing the change in market value of the investments, each year. It depends on the law in that country.

    Then again, the same is true of ISAs, though at least there’s no penalty for cashing them in, if the foreign tax treatment is penal.

    AFAIK, pensions aren’t always better in this respect. For instance, the 25% withdrawal might be tax free in the UK, but could be taxable overseas. And again, some countries might tax underlying income and gains on the portfolio, because generally the tax treaty with the UK will allow the country of residence to tax this.

    Going to live abroad can be a tax minefield. For instance, in New Zealand, if you have borrowings denominated in sterling (for instance on a mortgage on a house in the UK that you are renting out), they will tax you on any unrealised exchange gains, from a NZ$ perspective. eg, say your mortgage is £300k when you arrive in NZ and £1=NZ$3, so that’s NZ$900k, and assume the pound then weakens to NZ$2, so your mortgage has “fallen” to NZ$600k, so they would tax you on your NZ$300k unrealised gain, even though your mortgage is unchanged in GBP terms.

  • 113 hosimpson April 19, 2017, 12:27 pm

    @ivanopinion – you can only open a LISA if you’re a UK tax resident. That would make you a non-dom in NZ, so (to the extent that the rules haven’t changed in the last 10 years) you’d only pay NZ tax on your NZ income. If you later change your tax residency from UK to NZ (e.g. if you move there permanently), then from that point onwards your global income will be taxed in NZ, including investment income (however assessed) on any ISAs, LISAs, property – everything. In my experience, country hopping – especially sans a clear plan of where you’re going to spend your old age – is an expensive hobby. In more ways than one.
    Iro the permanent move, I knew a guy who had permanent residency in Australia (broadly equivalent to the UK’s indefinite leave to remain), but somehow managed to retain a non-dom status for tax, which is not a usual thing in that country. My point here is, there may be options, and getting advice from a decent tax lawyer who deals with international relocations is well worth the fee.

  • 114 The Investor April 19, 2017, 1:47 pm

    @all — Thanks for the very interesting comments. Yes, I’ve a mention (a nod, really) to both the benefits differences with respect to pensions and the overseas complications of LISAs (/ISAs) versus pensions in the draft of part two (which I hope to publish Tuesday) but I’m not going to be able to go into mega-depth. The whole thing is complicated enough as it is. (I think the draft is 2,000 words or similar). Perhaps I could do that in a part 3 roundup!? 😉 Or perhaps I’ll simply link to this very decent set of insights in this thread. 🙂

    Regarding waiting to open a LISA, I’d agree no rush UNLESS you are itching to buy a house in the next 12-18 months and the LISA will be part of that. You can’t use the LISA bonus in an account that isn’t at least 12 months old to buy a house, so you’d want to start that clock ticking ASAP in that case. Again, I’d just open one today with £100 and then have a ponder on long summery walks. The first year government bonus won’t be paid in until April next year, so in that sense there really is no rush.

  • 115 ivanopinion April 19, 2017, 2:02 pm

    @hosimpson
    I was only talking about moving overseas with an existing LISA/ISA/UK pension.

    I don’t think domicile is relevant for NZ tax, as they just go by residence. But I didn’t mean to divert this into a discussion of NZ tax. My main point, with which I think you agree, was that other countries won’t respect ISA or LISA tax wrappers and some of them might not respect UK pension wrappers either.

  • 116 ChewChew April 19, 2017, 2:13 pm

    LISA’s look interesting, but it’s worth noting that money held in a LISA is treated like normal savings when it comes to means and capital testing. The money is not ring-fenced like a pension (SIPP) so if you hit hard times in the future you would be expected to draw on your LISA (and other savings) before enjoying full benefits from the state or local gov.

  • 117 Dartmouth April 19, 2017, 10:09 pm

    For the me the 450k cap has put me off living in London. A 2 bed new build is very close to the 450k mark. Surely there will have to be some flexibility down the line?

  • 118 jvc April 20, 2017, 8:46 pm

    Interesting article and discussions about the LISA. Just to add my two pence, I opened LISA for myself and my wife on day one of the new tax year with HL , My thinking was simple, with the £ 1000 bonus, the amount I can put into ISA/LISA would be £21000 per person per year. this will speed up the process of building up my pot for FIRE. I am affected by the £10000 pension annual allowance. so the introduction of LISA is a good bonus for me.

  • 119 Nick April 22, 2017, 3:12 pm

    Is the pension angle on this really that good? I’ve maxed out my HTB ISA but as a house purchase is pretty likely in the next 12months I wasn’t going to bother with the Lifetime ISA. This article has actually changed my mind unless I’m totally missing the point? I wish a house purchase was longer than 12months away, especially as I’ll be footing the bill solely but alas I’m hoping we don’t get stung too badly

  • 120 Alex April 22, 2017, 6:11 pm

    Nick,

    You should read the guide over at MoneySavingExpert (http://www.moneysavingexpert.com/savings/lifetime-ISAs). However, you should know that:

    -You must have had a LISA open for a year to get the first-time buyers’ bonus, anyone with even an inkling of being a first-time buyer should open a LISA as soon as possible, with the bare minimum (can be just £1) just to get the clock ticking – in case you want to add to it later.

    The main differences between a Help to Buy ISA and a LISA are:

    -The Help to Buy ISA was launched in December 2015, and like the LISA, it has a 25% bonus that’s added to what you save, if you use it towards a first home.

    -You can have a Help to Buy ISA and a LISA.
    However, you can only use the bonus from one of them towards buying a home.
    Use the LISA for the 25% bonus to buy a home and you won’t get the bonus with the Help to Buy ISA, but you can still keep and use the money plus the interest.
    Use the Help to Buy ISA for the 25% bonus and you’d have to pay a penalty to use your LISA savings for a property. Though you’d still be able to use it and get the bonus for retirement savings.

    You can transfer a Help to Buy ISA into a LISA by 6 April 2018 and you get the bonus on ALL of it.

  • 121 Trevor April 25, 2017, 8:14 am

    The LISA allows you to withdraw everything tax free at 60 and I believe you can pay into SIPPs until you are 75 (please correct me if I’m wrong). So does that mean you could put £800 into a LISA to get £200 top up for a balance of £1000, then withdraw at 60 and put into SIPP to get a further topup of £250 to get £1250?

  • 122 Nick April 27, 2017, 8:41 pm

    Thanks @Alex,

    I’ve read the MSE page in the past, I didn’t appreciate I could actually hold both, I thought even holding them was mutually exclusive rather than application of the bonus, very interesting.

    I’m curious, can I hold multiple S&S ISAs in the same tax year? I didn’t think this was possible so if I open a Lifetime ISA I won’t be able to dump the remainder in index funds through iWeb again?

  • 123 ivanopinion April 28, 2017, 8:46 am

    You can only contribute to one S&S ISA per year. But a LISA is not a S&S ISA, even if it is invested in S&S. So you can contribute to both (subject to the overall £20k limit).

  • 124 Nick April 28, 2017, 2:44 pm

    @ivanopinion thank you for the clarification, I hadn’t found clear answers myself and was a bit concerned!

  • 125 IanH May 26, 2017, 2:52 pm

    Sorry for the dim Q but I’ve been unable to find the follow-up post mentioned in the last para: “In the next post we’ll see exactly who the Lifetime ISA might be good for, and who should say “no thanks”, and back away slowly.” – grateful if anyone can point me in the right direction.

  • 126 The Investor May 26, 2017, 3:43 pm

    @IanH — I half wrote it and never finished it. Hopefully soon!

  • 127 IanH May 26, 2017, 4:35 pm

    @TI Ha! Gotcha! – thanks for following up though – I guess the comments here cover most of wrinkles in the LISA provision anyway.

  • 128 Haphazard June 6, 2017, 6:56 pm

    I see Skipton are planning to offer a princely 0.5% on their cash LISA….

  • 129 Watermelon June 15, 2017, 12:49 pm

    I own a house but recently got married and my husband hasn’t bought a house before. Would he be able to benefit from the LISA if he decided to buy a house in the future or would he be treated as a non first time buyer given that he is married to someone who owns a house?

  • 130 Alex June 15, 2017, 3:16 pm

    Hey Watermelon,

    As long as he has *never* owned *any* part of any property *anywhere in the world* he is eligible to use the LISA to buy part of a house. That he is buying one with someone who already owns a house is of no consequence. Though note that:

    – He has to have it open for over 12 months before he can use it to buy a house (he can have £1 in it for that time, it just has to be open)
    – He has to get a mortgage; no buying outright.

    Full details are explained at http://www.moneysavingexpert.com/savings/lifetime-ISAs#buyingaproperty

  • 131 Eagleuk July 19, 2017, 9:37 am

    Ajbell youinvest has launched their lisa isa. The fees are cheaper than hl.co.uk

    https://www.youinvest.co.uk/lifetime-isa/charges-and-rates

  • 132 Alex July 19, 2017, 10:40 am

    @Eagleuk,

    Good spot.

    @TI/TA, Now that it looks like multiple providers are going to be launching their LISA offerings, would it be worthwhile adding Lifetime ISA charges and availability to your excellent broker comparison page at the next major update?

    I know that slitting your wrists looks attractive compared to adding more work to that document, but it would be really useful.

    🙂

  • 133 The Investor July 19, 2017, 11:17 am

    Yes, cheers for sharing the update here @Eagleuk!

    I have an unfinished 3,000 word draft on my follow-up to the Lifetime ISA post that is turgid and convoluted. Mostly my fault but also the fault of this confused product. There probably is a case for adding Lifetime ISA information to the broker table, and I’ll discuss it with @TA, but I fear I know his answer. And to be fair we’re still only talking 3-4 providers, it’s nothing like universal.

  • 134 ivanopinion July 19, 2017, 11:54 am

    I would guess that in most cases, the LISA charges will be the same as ISA. So, you could just deal with the few exceptions by way of footnotes.

  • 135 Vanguardfan July 19, 2017, 12:30 pm

    @ivanopinion, I wouldn’t assume charges will be as per ISA. It’s a rather different beast, with a lot more restriction on withdrawals and penalties etc. I guess charges will be more in line with SIPPs than ISAs.
    I think the fact that hardly any providers have started offering them (as well as TIs difficulties in producing a concise readable summary!) suggests they are going to be rather complicated….can’t see them disappearing as govnt have rather bigger issues to deal with at the moment, but suspect they might not be a massive success either.

  • 136 ivanopinion July 19, 2017, 1:34 pm

    @Vanguardfan
    You may be right, although HL and AJB seem to have the same charges for LISAs and ISAs. (AJB is cheaper for ISAs with funds worth more than £250k, but as the maximum investment in a LISA is £4k per year, in practice LISAs will not get close to £250k for decades.)

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