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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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{ 140 comments… add one }
  • 51 Neverland March 17, 2016, 5:55 pm

    The point that appears to have been missed so far as far as I can see on the lifetime ISA versus SIPP is the interaction with the UK benefits system

    £16,000 in a SIPP – complete access to benefits system

    £16,000 in any type of ISA – very limited access to benefits as you have accessible savings

    Particularly relevant to lower earners and people with health issues

  • 52 Grainne March 17, 2016, 6:57 pm

    Hi, im new to investing and have never had an isa before. What if I have more than 15k to invest in a s&s isa, where would I put any addional money if I exceed my isa allowance? Also what happens to that isa in the next text year, do I keep feeding into it? I want to passively invest but the isa seems to create abit more work. Sorry if these sound like simple questions, total newb! Thanks in advance

  • 53 Kraggash March 17, 2016, 7:38 pm

    The easiest way to handle the bonus would be for the Government (ie taxpayers) to add the bonus to the total sum withdrawn when the account is closed (at 60+) or used for house purchase. As it would be a percentage of the amount, it would of course include any growth.

    This has the advantage (for the Chancellor) of delaying the cost for a few decades!

    The owner of the ISA just has to trust that the government will make the promised contribution when the time comes. But you would be trusting the government to not change the tax rules anyway.

    The only losers would be the next generation, and as the Chancellor said, ‘this is a budget for the next generation (…to pay for)’


  • 54 Planting Acorns March 17, 2016, 7:54 pm

    Hey Grainne,

    You can invest in one cash AND one stocks and shares ISA per TAX year.

    So you have a week or so to put this tax year’s allowance into an ISA and you can then put next tax year’s allowance into an ISA on April 6 (making a total of c.30k minus what you have or will put into cash ISAs).

    If you have a lot more than 30k might be worth to skipping to the part about seeing a financial advisor ;0)

    You can only open one S&S ISA per year…then in the second year you can add to it or open a different one…

    Essentially if you’ve decided you definitely want to put your money in a S&S ISA, rather than a pension say, take a look round this site and others about which ‘broker’ or ‘fund supermarket’ you wish to use, go to their website, open an ISA up and put cash in it asap.

    Then take your time deciding which investments to buy with that cash. The cash can sit in the ISA for ever…its just important to get it in before the tax year ends.

    I’ve read half the articles on here (including every ‘slow and steady portfolio’ one) and I’ve decided which investments are right for me…but I’ve a DB pension to fall back on and do this for fun as much for survival and
    you may well decide to speak to a financial advisor…

    PS – ISA’s make life a lot easier not harder, because there’s no capital gains or income tax to work out…

    I hope that helps.

    @all … I’m not precious if any of this is wrong please do chime in

  • 55 the taxman cometh March 17, 2016, 7:57 pm

    Grainne – you can add to an ISA as often as you like, provided you stay within the annual limit in each tax year.

    So you can set up an ISA and put in as much as you like to start off with, and then add to it as you choose – I made a lump sum deposit of the whole ISA limit in my first year, another lump the next year, and then drip feed in amounts on a monthly basis to grow it over time.

    It’s not really than onerous once it’s up and running – it takes a while to setup, but you can automate monthly transfers in, and automate which fund(s) the ISA invests in if you are making regular deposits.

    You’ll need to consider where to put your money – this site has an excellent series of articles on various different model portfolios, and a comparison on the various providers and their charges and terms. Personally, I like things nice and simple, so I chose a Lifestrategy fund, but you’ll need to weigh up where is best for your money.

    Finally, I’d recommend having a good browse over the various articles on monevator. They cover most questions that a novice investor might have.

  • 56 Planting Acorns March 17, 2016, 8:05 pm

    We can be certain George Osborne won’t be Chancellor of the Exchequer in forty years time so his intentions as regard the LISA aren’t necessarily going to happen (eg if he was hoping it would replace pension saving)

    In my opinion though, that’s not what’s going on here… the Tories want us to move from being a nation of spenders who only invest in real estate to a nation of savers who invest in the real economy (having bought their own home)… In conjunction with the capital gains tax changes this budget nudges us in that direction…

    Its the sugar tax we should be working ourselves into a fury about ! What’s next? A book burning ?

  • 57 Grainne March 17, 2016, 8:37 pm

    Thank you for the helpful advice @plantingacorns and @thetaxmancometh. I have a civil service pension with work and will look to invest in a lifetime isa next year to supplement my pension. My current plan is to invest in Vanguard Lifestrategy 80 or 100, which is high risk but I intend to feed into it and ignore it for at least the next 10 years. What Lifestrategy did you invest in @thetaxmancometh? My goal is to retire as early as possible. Thanks again, great site!

  • 58 Jed March 17, 2016, 8:39 pm

    You could access your private pension when you reached 50 then a few years ago it was changed to 55. Its going to be 57 in 2028 and this new style Lifetime ISA its going to be 60. Its only a matter of time before its 65 and I’m sure it wont stop there. That is the problem with locking money away for long periods the rules are constantly changed and not usually to your benefit. Now we have more Isa’s than you can shake a stick at lol.

  • 59 Ash March 17, 2016, 9:17 pm

    Anything to get the taxpayer paying more into the housing market…

  • 60 Jonny March 17, 2016, 9:23 pm

    @Clive re. your point 2)

    If you withdraw the money at 55, not only will you lose the government bonus on the amount withdrawn, but you’ll also be charged 5% (for being a very naughty boy and withdrawing before 60).

  • 61 Matt March 17, 2016, 9:51 pm

    Problem with London Help to Buy is it is for new builds only – also the developers chose whether they will accept help to buy buyers, and some developers prefer not to (in zone 2) for whatever reason. Mostly London HTB is being used in new builds in Zones 3-4, and I have read recently – sorry can’t find the source right now – that in these areas many new builds are being significantly overpriced compared to existing properties in these areas, so essentially any benefit is being wiped out by the developer over pricing.

  • 62 Richard March 17, 2016, 10:49 pm

    with help to buy, does the government get to count their % as an asset? If so, pushing up house price will surely make their balance sheet look better? Any fall will make it much worse. When do they start counting the rent income?

    If so, the government is becoming even more entwined in the housing market and its success.

  • 63 Clive Candy March 18, 2016, 1:29 pm

    @ Jonny

    Knew there must be a catch! Thanks for the warning.


  • 64 AJ March 18, 2016, 6:19 pm

    Here’s my take on the lifetime ISA.

    As a savings vehicle for a house (by the way I disagree with the government subsiding saving for a house as more money chasing the same supply of housing just means higher prices for all):

    – It’s a great boost from the government for first time buyers and more generous than the HtBI

    – The 450k is no longer limited to just London which makes this very appealing to anybody buying a house outside of London.

    – In London, there’s the issue that 450k won’t buy you very much, and who knows how much house price growth there will be between now and when you come to buy.

    – The withdrawal charge of 5% is very unattractive making this fairly inflexible. You need to be pretty confident that you’re going to be able to buy a house and receive the bonus (or use for a pension – see below).

    – I expect that the cash returns will be less attractive than current HtBI and will be more in line with Cash ISA rates as this has dual purpose and there will be less scope for obtaining future profitable business (ie mortgages) for providers. In the short term rates may be higher to attract new business.

    – Yes, you could invest in other assets (ie equities) but that’s not a sensible option if you have a short time horizon.

    As an alternative to a pension:

    – The bonus is equivalent to lower rate tax relief, but a 25% reduction relative to higher rate tax (HRT) relief.

    – If you benefit from a salary sacrifice scheme you’re worse off to the tune of 15% as a lower rate taxpayer and 27.5% as a higher rate taxpayer.

    – There’s also no 25% tax free lump sum.

    – However, any money drawn from age 60 is tax free whilst the current system attracts tax. This benefit depends on how much income you take once you start withdrawing.

    – If you consider that the majority of retirees have a pension pot lower than £50,000 (I’m sure that’s very different for Monevator readers) then the average person is unlikely to pay any tax under the existing pension system so this is of no benefit at all.

    – And don’t forget, there’s a possibility that a future chancellor decides instead to tax future pension withdrawals under such a system!

    So all in all, unless you live outside of London and can put it to work for your house deposit, I think the Lifetime ISA is a pretty bad deal but the chancellor seems to have done a fantastic job of selling it to the masses. As many have posted I firmly believe this is George’s way of introducing the Pension ISA through the back door. It’s a bad idea, as we all know.

    I’ll say thank you very much for the additional ISA allowance and continue to cram as much money into my pension whilst I can take advantage of HRT relief and salary sacrifice (I expect both to not be around for much longer!). For information I’m in my mid twenties, living in London, lucky enough to be earning a little over the HRT theshold with no property. I have taken out a HtBI but with returns of 4% tax free it would be stupid not to whether I get the bonus or not.

  • 65 AJ March 18, 2016, 7:10 pm

    Oh, and if my post wasn’t long enough I forgot about employer contributions which are not offered on the Lifetime ISA. If this a choice between a pension and a Lifetime ISA then an individual choosing a Lifetime ISA will be missing out on a large contribution from their employer.

    Another source of revenue for the chancellor in the future would be to make employer contributions subject to tax and NI. I would worry very much about such a policy change as it would likely result in a significant fall in pension contributions and a lower standard of living for future generations in retirement.

  • 66 Minikins March 18, 2016, 8:22 pm

    I completely agree, it is simply a way for parents feeling sorry about their children’s future state pensions to save one up for them so the kids can get on and try to save for a house instead. It also means they don’t have to feel responsible for releasing equity from their own homes, downsizing or flogging the holiday home to get their darlings onto the housing ladder with a massive deposit – let them be responsible for that. They can stuff it with 4000 every year on the agreement that the children don’t touch it till their 60, parents will likely still be alive to make sure they don’t or they can write them out the will.

    JISAs are a bit of a joke really, not really worth the hassle and I’ve just had major hassle with my sons one as the JISA provider failed to contact the CTF people and transfer it over so it’s effectively void. In the process of sorting that fine mess out…lucky I found out early.I reckon there are lots of parents out there who’ve forgotten about the CTF, opened up JISAs and if the provider is as shoddy as mine was will have an 18 year old very disappointed with a null account and no growth over 5/6 years. No skin off the providers back and they can keep the interest, how convenient…

  • 67 Richard March 18, 2016, 9:24 pm

    I have a few concerns with this. If people see this as the way to save for retirement instead of a pension, will they be able to resist emptying to buy a house at 35? I would guess they will buy the biggest house they can and have to start saving for their pension all over again.

    Also how many of these will be saved in cash? I bet most will for 2 reasons. 1) if you are going to use it for a house you don’t want it to lose value – even if for 10 years it still will feel short term. 2) most people don’t want to bother thinking about investing themselves. At least a pension is an easy way for people to access the markets without thinking to much about it.

    I would think most people will have less in retirement than they could have if they saved straight into a pension from a young age.

  • 68 Planting Acorns March 18, 2016, 10:42 pm

    @Richard … Is this even about pensions ? I think we’ve all got “pensions ISA” thought process because we’re monevator readers…

    …this isn’t a replacement for a pension it’s just a suped up help to buy ISA… The withdraw penalty free at 60 caveat is added to stop the whinging there would be if it was for buying a home only…

    …why else only let people open one when they’re young(ish) and stop contributing at 50?? There’s the rub…no way any form of saving intended to be used to fund old age would stop at age 50…

    I’m going to open one of these and max it out with stocks/shares (may put the bonus into gilts each year so its as close to a no lose bet as one can take) and then use the money in retirement…but I’d put good money on the vast majority of these will be in cash and used to fund deposits …

  • 69 Richard March 18, 2016, 10:55 pm

    You get it, I get it but will your average person get it? How many people don’t pay into a pension even though their employer matches (I know people who didn’t pay into very generous DB pensions……)?

    Why invest in a pension? They get the same free money in the Lisa (excluding match), can use it to buy a house or retire. That makes sense, easy to understand, easy to use, clear, bonus sounds good. Or pay into a pension with something about tax benefits and shares and can’t access until 57 no matter what and yawn yawn. I wonder how many will opt out of their pensions to pay into this instead? Only when it is too late will they realise they don’t have enough to retire.

    I hope I am wrong though.

  • 70 Richard March 18, 2016, 11:02 pm

    Interestingly, I have just had a conversation and am already being told to pay into this ISA by family and friends. Get an extra £1000. Yet I am better off paying into a pension as I own my own house already, can access it earlier, get employer NI etc. People see the free £1000 and that is about it. It doesn’t compute that tax relief is the same logic as a bonus. Plus pensions have a bad reputation that ISAs don’t. I worry this is the thought process a lot of people will have.

  • 71 The Investor March 18, 2016, 11:34 pm

    Long-term readers may remember when we all gave our submissions to the Pensions Consultation, via The Accumulator, who for his part advised The Treasury in the article:

    Firstly, the incentive has to be upfront. Given the problem we all have with imagining the future, you’d have to be insane to think that offering tax relief years hence is more motivating than dangling loot now.

    But you do need to make the offer obvious.

    What do retailers do? They give us money off. Three for the price of two. Cashback. And in big bright happy shopper flashes.

    This is the language that employer contributions and tax relief should be couched in.

    A basic rate tax payer who saves £1,000 into their pension?

    That’s £250 cash back!


    Sounds familiar? 🙂

  • 72 Learner March 19, 2016, 5:24 am

    “with help to buy, does the government get to count their % as an asset?”

    The government takes a proportional amount of any gain or loss at time of sale, if that’s what you mean. I’d expect it to be recorded as an asset. After five years it even generates income.

  • 73 Richard March 19, 2016, 8:39 am

    @TI – exactly, great points! I have experienced the psychology of this myself. I pay into a work pension and into a SIPP. The work pension vanishes out of my pay check. I hardly notice it (other than the reduced income). It is just a line on the out going. Psychologically that was always my money. So rather than keeping it, I am tying it up for 30 odd years. Think what else I could spend it on. I get nothing telling me how much tax I saved on it/how much the governement gave me. I take any drop in value as an assault on my money.

    Now my SIPP, I pay that physically out of my bank account. Then the government writes me a cheque that gets added to it. Totally different feeling. I have got something for nothing, I feel good. I also think I can absorb more loss as not all that money was mine in the first place.

    @learner – so as they slowly increase their % of property owned through this scheme, they have a much more invested incentive in preventing ANY drop in prices. Sounds dangerous to me…..

  • 74 Planting Acorns March 19, 2016, 10:13 am

    @Richard … People not paying into pensions was a problem long before the LISA…

    I remember having dinner with some friends a few years ago…all of us were living / working in London. Most of the conversation was related to who’s sexing who, where we’re going on holiday, etc etc, you know, normal mid 20’s stuff… But somehow pensions came up.

    One of my friends had been told by an older colleague he should up his pension contributions to the maximum the company (Bank of America) would match for his level, which was a further £200/month. I said I agreed with his colleague – he’d see £160 less in his pay check but be £400 better off… But he was worried banks wouldn’t lend him enough to buy a home if he used his pay in this way…

    He bought a two bed flat in Beckenham in 2012 for £275k, similar one in his block sold for over £400k late last year…

    So he’s probably not looking back on that conversation thinking he made a mistake.

    …I guess my point is, if you can’t get people to forgo £160/month to gain £400 a different approach to encouraging saving is needed.

    On a separate note – sounds like I’m in a similar position to you (home owner/ higher rate tax payer/ company pension) but I’ve chosen to do further saving via an ISA (and will use LISA) rather than SIPP because I am worried both that the ever decreasing lifetime allowance will fall to a level it catches modest savers and given the ridiculous amount of fiscal drag we’ve seen the past six years I’m not sure I won’t be a higher rate tax payer in retirement. Not because I earn a great deal, but because that higher rate limit just wont budge…

  • 75 The Investor March 19, 2016, 10:14 am

    Reading through all the excellent responses here, I wonder if the attractions of the Lifetime ISA are being slightly undersold due to some understandable cynicism about long-term commitments by the Government.

    On the face of it, a 25% bonus up-front and no tax on the way out is a very good deal for the typical young Monevator reader, I’d have thought.

    Reading through the press today, some journalists really don’t seem to understand that income from a pension is taxed on withdrawal, after a certain threshold and ignoring the tax-free lump sum. They just see the tax relief upfront.

    True with smaller pension pots the situation is more nuanced (due to the personal allowance) but is that likely to be the typical situation for today’s young Monevator reader in 30 years time? (I hope not, or we’ve not done our job properly! 😉 )

    If I was young enough to qualify then even as a higher-rate taxpayer I’d open LISA I think, even just as has been said by myself and others to diversify the tax reliefs.

    True, the rules on access age could change and (less likely I believe) the tax-free withdrawal element could be tampered with. But that’s true of any long-term government scheme, so a bit of a wash for me.

  • 76 Alex March 19, 2016, 11:38 am

    I think the main benefit for those with existing pensions and a house is the option of big tax free withdrawals.
    Imagine one year after 60 you have a large unexpected cost for example, health care costs. Withdrawing more from a standard pension could throw you up into the higher rate tax band. However having the lifetime ISA as a backup to your existing pension means you can withdraw a large chunk tax free for an emergency.

    Who knows what great innovation might bring in the next 50 years, we could be buying expensive robot bodies to replace our worn out ones!

  • 77 Richard March 19, 2016, 12:48 pm

    @PA, I agree with you. My main concern is your friend may have decided to put ALL his money into a LISA rather than into a pension aimed at the short term house purchase. So at the end he would have £0 in his pension and a fat wedge in his LISA. Then he comes to buy a house. Empty his LISA and get a £350k house instead of a £275k house. Great, probably worth £500k today. But he has to hope house prices stay up and has to downsize to release that money. As well as higher morgatage payments. And all his eggs are in one expensive house. Depends on what he does next and how much time he has left really. If 23 then not so bad. If 40 then getting harder to save enough (esp if in a cash version of the ISA).

    Not sure what I will do with regards to the LISA. Partly depends on what happens with pensions over the next few years. I will probably open one so I have it and just pay a bit in for now.

  • 78 Planting Acorns March 19, 2016, 1:53 pm

    @Richard… Ah I see your point, can’t speak for my friend but what you’re saying makes a lot of sense.

  • 79 Richard March 19, 2016, 5:30 pm

    What is also worrying is that he may find that because of this scheme, the £350k house is actually the same house £275k would have bought without these schemes……

  • 80 JonWB March 19, 2016, 8:47 pm

    I think it is worthwhile investing in a Lifetime ISA (compared to £4K more in an ISA) if you haven’t bought a house – even if you think houses are vastly overpriced – as:

    (a) You can flip a first property you buy for cash (e.g. a mobile home around £35K+, then sell it after some minimum holding period) to lock in the 25% tax free gain courtesy of the government (You are very well protected as the capital cost was low and the government takes the first 25% hit if you buy using just the Lifetime ISA and mobile home prices do crash).
    (b) You can buy a proper first property (and wait it out to do so until house prices have crashed).
    (c) You can wait and accumulate then do (a) if you can wait no longer, otherwise do (b) when the opportunity arises.
    (d) Hold it until 60 to lock in the 25% gain courtesy of the government.
    (e) Accept the 5% penalty for the optionality (of (a), (b), (c) and (d)) over an ISA which I think is worth accepting.
    (f) I see the risk of introducing a taxed withdrawal as low for now, since if they tried to, you’d just withdraw with the stated 5% penalty (it pays to watch the budget and keep the afternoon free – e.g. transact and crystallise before the midnight deadline on a horrible adverse change! For LISA, you want a provider with a fully automated withdrawal process for this reason…..

    SIPPs are not really viewed as restrictive for individuals if they also invest fully for ISAs subscriptions. Those individuals don’t need the flexibility in the SIPPs as they have it in the ISAs anyway.

    It is pretty clear that now – more than ever – you need to be fleet of foot in terms of investment vehicle allocation in the UK. You also absolutely need to pay attention to the medium to long term goals/aspirations of the politicians who used to just tinker and tweak, but now make much more substantial changes.

    Some comments:

    @The Investor – You mention optionality. Optionality is incredibly important, particularly around legislative change and tax wrappers. For example, the new Flexible ISA arrangements coming in on 6th April 2016 are very useful to those with large ISA balances. Essentially you can withdraw 100% of your ISA balance (however large) and repatriate it within the ISA in the same tax year (providing the ISA manager allows this) without any tax implications. I’m thinking it could get creative on paying down an entire interest only mortgage for say 350 days in each year but keeping that money ISA wrapped (maybe not now, but if interest rates go up substantially). Or use it to break a house chain on moving (as you can temporarily own two properties, one mortgaged, one mortgage free). Or some sort of arbitrage if a cap is introduced on ISA balances (e.g. don’t do a permanent withdrawal, withdraw and repatriate and earn outside the ISA, maybe in a company loan to a Close Investment Company) . If you put yourself in a position where you aren’t a forced seller of assets, or forced into withdrawal from investment vehicles, you get lots of opportunities like this as rules change.

    @Planting Acorns – Legislative risk around mainstream personal taxation (of which pensions is the biggest) is real, ongoing and demands lots of attention. The perceived threat of future change can be very useful and demands attention beyond the headline, to what I call secondary and tertiary political and legislative implications. For example, I think it is highly likely the LTA will be abolished in the next 35 years (before I am forced to suck it up at 75) purely because it will (a) have been such a successful up front behavioural deterrent and that is it’s purpose, (b) it creates such a nightmare for pension scheme administrators and employers, (c) it is very unpopular by all and (d) the Treasury is concerned with upfront tax relief now, not 55% on unknown amounts in decades to come under some legacy pension system. Whilst I get relief comprised of 40% – 60% Income Tax, 2% Employee NI and 13.8% Employer NI via salary sacrifice then I’m happy with large SIPP contributions, even with 55% tax on the way out at 75 as the default no change option (the reduction in LTA is more painful and harder to model, but I’ve decided to suck it up as I ws just a little too low when they started hammering it down from £1.8M -> £1M). If salary sacrifice goes, or reliefs are capped, I stop and never contribute again. If I’m wrong, then maybe stage exit left on a QROPS.

    @LegalBeagle – My children are both under 10 and already have significant Child Trust Fund balances (they will be transferred to JISAs at some point). This LISA tax break is worth 5 figures for each of them on just drip feeding inspecie transfers into a LISA (and likely much more as the intention is continue to subscribe in full each year). Whether they buy a house or a mobile home will depend on market conditions. You can be sure the wealth planners will be all over this one.

    @Mr Zombie @The Investor – There is always the issue of who can make use of benefits like the LISA. Clearly, those with time, money and a better understanding are at an enormous (insurmountable?) advantage, but it really does require all three to make significant gains from proper financial planning. What is really needed for fairness is to ensure those who can’t afford to utilise schemes/allowances because they can’t raise the cash (but would otherwise qualify) can in some way sell the allowance on to someone who can. The benefits would need to be a lot less generous due to increase in general overall take up, but at least the lower earners would benefit a little. More importantly, they would be engaged in the process of personal financial education. Most of personal finance is only relevant if they can save, otherwise it is redundant (aside from budgeting and avoiding debt) until such time as they have substantially increased their earnings, or significantly reduced spending/paid down borrowing. Why not make that wealthy 30 year old buy up a £1000 LISA benefit by paying 4 other under 30’s £100 each for the £200 allowance each gets (5 x £200 allowance = £1000). If there is a rights issue and you don’t subsribe, you can sell your rights to subscribe to another investor. Is it really that different if the anology is Country = Company, Citizen = Shareholder?

    @KISS – I think the state pension will be means tested in 35-40 years time. Should millionaire (property) pensioners who paid much lower percentage NI (which was capped) than the millennials do now, get a full state pension? There is no reason to pay a pension to a pensioner living in a £1M property other than they vote and their vote counts (particularly as 95%+ will have bought it for 1/3rd or less many years ago and not had to pay tax on the gain). If the government needs to, it should pay the pension and have a charge on the property for a refund on disposal with a say 7% compounded interest rate built in (or how about the same rate as for that years student loans! – a nice inter generational link). The question is whether you can look beyond the state pension and say, I think it will be irrelevant for my level of saving/investing, unfortunately, for some, they probably are better off not saving but i’d always want to try and be my own chancellor, rather than rely on the unknown chancellors in 20-30 years time.

    @Steve – SIPP is still 55 at the moment. They haven’t introduced the legislation for 57 yet (although it was announced as a done deal at the time).

    @Matt @The Investor @megneto – Housing in London. Is it riskier to lend/borrow 120% on £500K (in 2006, think Northern Rock) or 80% on £800K (in 2016) – same London flat. All bank risk models assume it is less risky to loan at 80% LTV rather than 125% LTV, without questioning how realistic the V is on that LTV. The V is seemingly just current market price. If banks thought Northern Rock was nuts to lend at 125% LTV on £500K in 2006, then why are they happy to lend at 80% LTV on £800K for the same property? Does anyone seriously believe the outlook is better now than it was thought to be in 2006? Don’t forget that all mortgages since 2009/10 ish reset to lender made up rate. It doesn’t require interest rates to rise, just for negative equity as that precipitates mortgage prisoners on 5% which will probably drive a highly aggressive negative feedback loop (unless perpetual, interest only mortgages, fixed at -1.5% for 30 years are on offer, then I’m a probably a buyer!). Plus the lender can’t split the book and do different rates as there is only one lender made up rate. A real mess and disaster waiting to happen. As megneto says, there is a trap to CGT in so much as unless you think a property will fall by 28% in value, why would you ever sell, unless forced to – hence the BTL tax changes on mortgage interest deductions.

    @Neverland – Aren’t most people in a position to use ISAs/SIPPs/LISAs in any significant way unlikely to be those that access the benefit system (either now or in near future). Genuinely interested as I’ve no experience of this.

    @Kraggash – I don’t think many people would trust the government to add 20% to a six figure balance at 60. I know I wouldn’t, it is hard enough to trust the government using SIPPs when it is added up front and I”m an aggresive user of tax allowances and taking on legislative risk.

    @Jed. Age at drawing pensions. Since 2010, It has gone, 50, 55, stated as 57 but not yet in legislation, then the DWP select committee suggested in April 2015 that it should be state pension age less 5 years, which would be 62+ dependent on age. So in the last 7 years, 12+ years has been added onto the suggested minimum age. If that is a trend line that continues, it really doesn’t matter what the tax rate is on withdrawal for anyone under 40 with a SIPP, since mortatilty via suggested minimum age for withdrawing benefits will deal with them before they become entitled to withdraw!

    @Richard @Planting Acorns – At some level we monveator readers should be thankful large numbers of high earners don’t get personal finance at all. If they did and lots of people were doing what the likes of monevator readers do, the incentives to induce the behavioural aspects of saving and investing would be far, far less generous. ISAs are so generous because most of the accounts and value are in cash, whereas the power lies in investing in other asset classes for tax free compounding whilst the government doesn’t see this as lost revenue (unlike upfront tax relief on pensions). The marginal rate of relief on pensions will go, but it is a full 10 years since A-day revolution and the increase in the adoption of SIPPs. That in and of itself is quite remarkable in terms of how long the marginal rate of relief has lasted under such favourable conditions. Sure the taking the benefits part has been made SIPPs significantly more attractive for many, but I thought that was likely to be the case at some stage (I had probably a 25 year window from 55 to pick the time to take benefits under favourable conditions but it has come much earlier – possibly too early and the pendulum will swing back).

  • 81 stuart March 20, 2016, 1:56 am

    does a lifetime isa mean that with anytime you are made unemployed you will be expected to draw from this if its worth more than £6000 as per rules by dwp, as if its a pension then there safeguarded when you need a claim for any benefits.
    am i wrong here,

  • 82 elef March 20, 2016, 4:30 pm

    Big drawback of the LISA (apologies for any sloppiness, on the phone):

    You are locked in and vulnerable to the whims of a future government. Why would this this worse than a pension/isa?

    Pension – you are locked in and they can hike the age you can get it but you are taxed on the exit which you’re relatively protected on.

    LISA – you are locked in and they can hike the age you can get it, withdraw the bonus top up AND decide to tax you on exit. Nothing you can do about it as you are locked in (unless you pay the harsh cash out penalty).

    ISA – you’re not locked in. Govt announces they will tax on exit. Say thanks for the ride and cash out. (Unlikely due to chaos it wold cause in the market (especially retrospectively)).

    I can just about see the value of a LISA as a hedge on tinkering to SIPPs and ISAs. *tin hat time* I have so little faith politians not to tinker that I’m gonna pass and just fill up the pretty substantial ISA allowance.

    Happy to be corrected by the wisdom of the Monevator crowd though!

  • 83 Planting Acorns March 20, 2016, 5:12 pm

    @elef … Just a personal opinion but I don’t think the govt. will remove the tax free status of any product with the name ‘ISA’ in it… certainly not retrospectively.

    They have other options for when they need to skin the goose :
    – lower the bonus
    -introduce a lifetime allowance
    -lower yearly allowance

  • 84 Jason March 21, 2016, 8:32 pm

    Where your explanation reads “Lifetime ISAs will be available from April 2017, so you’ll need to be 40 or younger at that time to open one.” Is this correct? I am hoping so, as I will be 40 years and 6 months old. I doubt this info is correct though, as I thought you had to be “under 40”, in which case I will have missed out. Could somebody please clarify this for me. Thanks in advance.

  • 85 The Investor March 22, 2016, 9:26 am

    @Jason — Apologies, that was indeed inaccurate on my part, I guess in the heat of battle I was thinking “40 to the day” but the Treasury does seem to rule out *all* quartogenerians, however freshly minted. 🙁 I have corrected to “under 40” as per the Treasury’s detailed guidance so far.

    Here is the specific section FYI (note it just says “from April”, but I’d bet it will mean from April 6th (start of the tax year):

    1.3 From April 2017, people under the age of 40 will be able to open a Lifetime ISA and contribute up to £4,000 in each tax year. The government will then provide a 25% bonus on these contributions at the end of the tax year. This means that people who save the maximum each year will receive a £1,000 bonus each year from the government. Savers will be able to make Lifetime ISA contributions and receive a bonus from the age of 18 up to the age of 50.


  • 86 michaela April 1, 2016, 12:59 am

    What About the brexit impact? Hello im an EU citisen And Aš im used to live with Věry little money i started to do big savings also have some savings in my homecountry not yet avlb (May 2017) im really keen to buy the house And temporary rent the spáře room/s before settling the familly. But Aš im in UK for Just a year now i wonder what can happened with my savings in čase of brexit And whether its Worth to change my help to buy into lifetime isa? Thank you

  • 87 The Investor April 1, 2016, 10:25 am

    @michaela — Congratulations on getting started with saving! I’m afraid though I can’t help you with your questions about Brexit, as I don’t know the rules for ISAs about what happens if you’re not a UK citizen and you hold one. (In fact I thought you had to be a UK citizen to open one, so if you’ve got a Help to Buy ISA then I guess I was wrong about that. 🙂 )

    Personally I think the risk of Brexit is still fairly low (although increasing with every day) but I can see it must be a big worry for people like yourself trying to play for an unknown future. Good luck!

  • 88 ivanopinion April 2, 2016, 1:36 pm

    One factor that I don’t think has been mentioned yet, which is that LISAs make it even more clear that students should always take the maximum student loan that they are permitted.

    If the student has, or their parents are willing to provide, cash that they could use to cover tuition fees or living costs, it is already the case that they would be better to hang on the cash, because doing so will almost certainly generate more benefit than the interest that they end up paying on the student loan (really a graduate tax). But now there’s an extra reason, which is that by taking the maximum loan they have more cash than they otherwise would have, so they are more likely to have cash to put into a LISA, and pick up a free £1000 pa from the government.

  • 89 ivanopinion April 10, 2016, 12:02 pm

    @TI To put money into an ISA you need to be UK resident. https://www.gov.uk/individual-savings-accounts/overview

    (I presume this means tax resident.)

    So non-resident UK citizens can’t put money into an ISA. But if you are going to be taxed in another country, an ISA wrapper isn’t much use anyway.

    That’s a problem with all these tax wrappers: for anyone who might go and live overseas, they provide no tax shelter. In fact, this could be a serious impediment for someone who would like to move overseas if they have big investments in ISAs or UK pension wrappers. Their taxable income and gains might be a lot higher than they would have been in the UK.

  • 90 Andrew Porter July 17, 2016, 7:47 pm

    I am considering paying a one off amount into an ISA this year. Would it be better to wait until next yeara nd pay this into a LISA so I get the 25% bonus?


  • 91 TenMoreYears October 21, 2016, 3:38 pm

    Sorry to comment on this article 6 months after the last comment, however this article (as do many others on the web) reference a change in the age individuals can draw on a private pension from 55 to 57 starting in 2028. This would impact me and change my planning (specifically, increasing the percentage allocated to ISA vs Pension). However, I can’t find a single official reference (e.g. on gov.uk) to say that this change is actually going to happen. All I can see are some articles from 2014/15 that say it is proposed to happen, and then a few references in 2016 to it having happened on some articles that are really about other things. Can anyone clarify the current position?

  • 92 TenMoreYears October 21, 2016, 3:42 pm

    Sorry, ignore my question, I found the answer in one of the other comments – great website by the way!

  • 93 The Investor October 21, 2016, 4:03 pm

    @TenMoreYears — Cheers!

  • 94 The Rhino April 18, 2017, 12:32 pm

    Hmm – maybe you’re right and I should open one just in case? I’d mentally written it off after 1st glance, but experience tells me its unwise to ignore TIs advice

    Reading TI comment no. 75 and then reading http://www.moneysavingexpert.com/savings/lifetime-ISAs

    I think MSE has also made the error that TI highlights of other journalists, i.e. not considering tax on the way out of a pension?

    Its definitely not a straightforward calculation for someone like me who is in the ‘pension’ rather than ‘1st time buyer’ bracket. But then again I don’t think its worth too much analysis as its only 4k.

    Maybe broker table needs updating with where to get a good one?

    I’ll do a bit of digging..

  • 95 Ash April 18, 2017, 1:02 pm

    (Haven’t read all the comments so apologies if this is already discussed)

    I’m intrigued by the Lifetime ISA for its pension possibilities.

    I’m currently putting about 35% of my salary into my employer pension to avoid a load of higher rate tax, and i intend to continue doing that.

    However before i started pumping my pension contributions, I invested in ISAs and have around 50K of shares in ISAs (all sitting in Halifax sharedealing attracting virtually no costs).

    That money is sitting there in various cheap index trackers, with no real plans for its use other than its nice to have quite a few months salary on tap somewhere.

    What i’m wondering is whether I should start selling 4K of shares per year out of Halifax and re-buy them inside a LISA, and get a 25% bonus on them. There’s a possibility I’ll need to sell and then take the 6.25% hit, but most likely i won’t need to so I think the risk is fairly low.

    Am I missing something or would this be a fairly easy way to juice up my existing ISA holdings over the next 12 years or so?

  • 96 Alex April 18, 2017, 1:10 pm

    Lifetime ISAs have a huge (potential) problem that you haven’t mentioned.

    Pensions are not considered if you need to be income assessed (for example for a benefits application) or taken into account in the event of insolvency.

    Lifetime ISAs are taken into account as assets for income assessment in the case of a benefit application, or in the event of insolvency.

    For example, you are in your twenties and you lose your job for whatever reason. Annoying. So, you submit a claim for Universal Credit / Council Tax reduction / Housing Benefit / NHS Help with heath costs etc. If you have over £6000 of assets your benefit is reduced, and no award is made at all if you have over around £15000.

    With a normal ISA, this is not a big deal as you can withdraw the cash to live on, with a Lifetime ISA you are obliged to use the cash to live on and take the 25% (including the additional 6.25% penalty) until you fall below the asset cap.

    As people under 40 are much more likely not to have a career with one employer for life, and even be on lots of fixed term contracts (and the like) needing to claim benefits at some point in your life is pretty much guaranteed. If you have a Lifetime ISA you won’t even be able to get free dental care and a council tax discount in the event of unemployment without paying the penalty fee.

    It’s important to note that the house you live in is excluded from any benefit calculation if you own it, so you are left in the ridiculous situation where if you have managed to get a mortgage with your LISA funds before losing your job you can claim mortgage interest payment benefit from the government, along with everything else even up to travel costs to get to medical appointments, but if you haven’t saved up enough for a deposit yet or are still looking to buy you have to lose your deposit savings and pay the penalty to boot.

    If you are saving for a first house, a LISA is a possibility if you understand the pitfalls. If you are saving for retirement a pension is much better in most cases as (although a basic rate taxpayer gets 5% less tax relief) the protections offered are much more valuable.

  • 97 Haphazard April 18, 2017, 1:36 pm

    I agree that the access to benefits point is important. It’s the most off-putting thing about the penalty. A 20 year old takes out a LISA now, confidently setting out on a promising career, and saves diligently… in her mid-40s, she gets a chronic, but not terminal, illness meaning she can no longer work… and faces a massive penalty on her LISA savings. If it’s being used as a quasi-pension, the same protection as applies to pensions should apply in this case.

    Ivanopinion also makes a good point about moving abroad. Lots of people these days spend part of their working life abroad. Other tax jurisdictions may well want to tax money in a LISA, presumably, could that force people into early withdrawal?

    If they’d just take these sort of concerns on board…

  • 98 Andrew Porter April 18, 2017, 1:51 pm

    I know that in Australia interest and earnings on holdings in UK Pensions aren’t taxed but they are in an ISA which makes keeping an ISA pointless when moving there. I imagine they would also tax LISAs as Haphazard said. Might be the case when moving to multiple countries.

  • 99 Colin April 18, 2017, 4:49 pm

    Hi first off I wanted to say I have been reading your site for years and have learned a little, I invested for a few years but withdrew the lot to buy my dream property when the housing market in my area had collapsed. I work in property so was confident of timing the market for that one. Now more or less mortgage free I am starting my investment journey again to supplement a 15 years worth of final salary type pension available at sixty and an accumulating career average pension which won’t be available until at least 68. Ideally I would like to retire at around 60 so wanted to build up an ISA pot to cover those 8 years and the lisa looks like a good way to help and I also like free money. Further pension contributions not really an option as I have worked out there will be too much tax on the way out. Anyway enough rambling my question is what do the very knowledgable authors and readers think about using the vanguard target retirement 2040 in the lisa to help with this? I am happy to take some risk with this as at worst I keep working.
    Any thoughts greatly appreciated.

  • 100 The Rhino April 18, 2017, 4:58 pm

    Looks like HL, Nutmeg and Share Centre are currently the only providers (http://www.express.co.uk/finance/personalfinance/789270/Lifetime-ISA-providers-bank-offers-individual-saving-account)

    HL and Nutmeg are very similarly priced, ad valorem at 0.45%, i.e. expensive. Can’t find share centre costs but its likely to be fixed fee, whether it will be ISA level charges or SIPP level charges I don’t know.. Fixed fee unlikely to make much sense as you can only contribute 4k per annum so it would take a while before it gets economical.

    So a 0.25% ish ad valorem needs to turn up ideally

    That said, I may have shot myself in the bollock, as I have already maxed out my ISA and I turn 40 this year. That probably means I can’t open one even if I want to? The Lifetime ISA 4k allowance is carved out of the standard ISA 20k allowance right?

    I don’t think I’ll cry myself to sleep over it. It seems complicated and very poorly thought out (in the standard conservative govt mould), but granted for a BRTpayer it would seem to be tax free on way in as well as way out which isn’t to be sniffed at (as TI says its effectively free money) but for some the normal pension route may be freer still depending on myriad circumstances. But you have to be happy to wait an age to get it (i’m talking about the pension perspective only here – I haven’t bothered thinking about the 1TB perspective)

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