budget-saving-isaThe ISA allowance rises from £15,240 to £20,000 a year from April 2017 and the Sunday Times reckons this means a married couple could become ‘ISA millionaires’ in just 16 years if they both pay the maximum each year and earn an average annual return of 5% on their money.

 

 

Individuals can contribute to a Lifetime ISA alongside other ISAs (cash, stocks and shares etc) as long as they remain within the overall £20,000 a year limit.

From April 2017 anyone aged between 18 and 40 will be able to open a new Lifetime ISA. This will allow up to £4,000 of savings each year to which the Government will add a 25% bonus. Contributions will be made with the individual’s own cash. This additional bonus will be payable up to a maximum of £1,000 for each year between the ages of 18 and 50.

The money in a Lifetime ISA can be used to:

  • help first time buyers buy a home worth up to £450,000 at any time from 12 months after opening the account; or.
  • supplement retirement income from age 60 (unlike a pension where it is age 55).

Savers can withdraw their funds at any time but will not receive the government bonus and will incur a 5% charge if the withdrawal is not for the purchase of their first property or after they turn 60 (unless they are diagnosed with terminal ill health as per current pensions legislation).

With a maximum contribution of £4,000 a year, the most that can be paid onto a Lifetime ISA will therefore be £128,000 with a maximum bonus of £32,000.

If you would like to understand how this could work for you, please contact us info@www_logicfinancialservices_co_uk.sites.public-internet.co.uk