FAQ About Individual Savings Accounts
A Lifetime ISA (LISA) is a type of individual savings account (ISA) that was introduced by the UK government in April 2017. It is designed to help people save for two specific purposes: buying their first home and/or saving for retirement.
Here are some key features of a LISA:
Eligibility: To open a LISA, you must be aged 18 to 39 years old. Once you open a LISA, you can continue to contribute until you turn 50 years old.
Contributions: You can contribute up to £4,000 per tax year to a LISA. The government will add a bonus of 25% to your contributions, up to a maximum of £1,000 per tax year.
Withdrawals: You can withdraw money from your LISA to buy your first home (up to a maximum property value of £450,000) or after you turn 60 years old. If you withdraw money for any other reason, you will be charged a penalty of 25% of the amount withdrawn.
Investment options: Like other types of ISAs, a LISA can be a Cash LISA or a Stocks and Shares LISA.
Tax benefits: Like other types of ISAs, a LISA offers tax-free growth and tax-free withdrawals.
It's important to carefully consider your individual financial goals and circumstances before opening a LISA. While a LISA offers generous government bonuses, the penalty for early withdrawals can be high, and a LISA may not be the best option for everyone.