Lifetime ISA

Lifetime ISA is an individual savings account introduced by the government to help people living in the United Kingdom to save for later life and/or to buy their first home in the UK.

Lifetime ISA is a tax free savings account. Every £100 you put in the ISA account, the government would pay you £25. In other words, the government will add 25% bonus to your savings.

Age limit

You must be over 18 of age and under 40. You must be living in the United Kingdom to be eligible to open a Lifetime ISA account unless you are a Crown Servant (i.e. a diplomat or civil servant) or their spouse or civil partner.

Saving per year

The maximum you could put in your ISA account is £4000 per year and can continue until you reach the age of 50. After you reach 50, you would not be able to put in any more money in it. you account will stay open and your savings will still earn interest or investment returns.

25% Withdrawal charge

If you withdraw your money from your ISA account before you reach the age of 60, the government would take back the 25%, they called it a withdrawal charge.

The withdrawal charge would not be levied if you are:

  • Using the money to buy your first home.
  • Aged 60
  • Terminally ill with less than 12 months to live
  • Transferring to another Lifetime ISA with a different provider.
Use Lifetime ISA to buy first home

You can use your Lifetime ISA to buy your first home, if you have opened the ISA account for more than 12 months. You are buying your home with a mortgage. You property price is below £450,000. You must instruct your a solicitor or a conveyancer to apply for the fund in your ISA account and the fund will pay directly to them.

You can transfer money from Help to buy ISA to your Lifetime ISA. Take note that the 25% withdrawal charge applied to you if you transfer money from Lifetime ISA to Help to Buy ISA.

Further reading about Lifetime ISA account, click here.

Help to buy ISA

Help to buy ISA is introduced on 1 December 2015 to help people living in the United Kingdom to buy their first home. The government would pay £50 bonus for every £200 you saved and put in your ISA account.

Your initial deposit into your Help to Buy ISA can be up to £1200 and thereafter £200 a month. The bonus is capped at £3000 on £12,000 savings. The bonus is tax free.

You must be 16 years of age, have a valid National Insurance number and a resident in the United Kingdom.

Your first home must be in the United Kingdom. This will be the only property you own and you intend to live there. You are buying your first home with a mortgage.

If your property is in London, the purchase price must not exceed £450,000. Anywhere else in the United Kingdom, your purchase price must not over £250,000.

You may use the ISA calculator to work out how much government bonus you will receive based on the saving you put in your Help to buy ISA account.

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