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Lifetime ISA – Q & A

What is a Lifetime ISA?

Help to Buy ISAs are now closed to new applicants. The Lifetime ISA has been introduced by the Government which operates on a similar basis but with some slight changes. A Lifetime ISA can be opened by anyone aged 18 or over but under the age of 40. The account can be used to save for your first home or for later life. As with the Help to Buy ISA, the Government will add a 25% bonus to your savings in a Lifetime ISA up to a maximum of £1,000 per year. For example, for every £500 you save the Government will increase the savings at a bonus of £125.  You can deposit a maximum of £4,000 each year. If you wish to open the Lifetime ISA for the purpose of saving for later life, you can take out the savings when you are 60 or over.

How do I set up a Lifetime ISA?

Not all mainstream banks are offering the Lifetime ISA Scheme at present. The main providers are AJ Bell, Skipton Building Society, Nottingham Building Society to name a few. A simple Google search will assist in finding the right provider for yourself.

Are there any Requirements/Restrictions?

Once you have opened your Lifetime ISA, you can withdraw money for one of the following reasons:-

  • to buy your first home
  • if you are aged 60 or over, to contribute towards a pension/living costs,  
  • if you are terminally ill with less than 12 months to live.

 If you do withdraw cash or assets from the ISA for any other reason you will be charged a 25% fee. As explained above, you can only open a Lifetime ISA if you are aged between 18 and 39 and you can only deposit a maximum of £4,000 each year into the ISA. You can hold cash or stocks and shares in your Lifetime ISA or a combination of both.

How do I claim my Lifetime ISA Bonus for Buying a First Property?

You will need to notify your solicitor when you instruct them in your purchase of a first property that you have a Lifetime ISA you wish to encash. Your solicitor will then liaise with the Lifetime ISA provider and find out from them their requirements for releasing your savings including the additional bonus.

Will my Solicitor Charge Additional Fees for Dealing with a Lifetime ISA?

Due to the additional work required when dealing with a Lifetime ISA, your solicitor may charge an additional fee in relation to this. This additional cost is likely to be in the region of £100 plus vat but will depend entirely on your ISA provider’s requirements when releasing the funds.

For further information please contact Dominique Oliviero at Clough & Willis Solicitors.