New Lifetime ISA: Beware the Risks

The new Lifetime ISA launches next month offering savers under the age of 40 a chance to save £4,000 a year, to be topped up by the Government

Emma Wall 7 March, 2017 | 3:34PM

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Next month a new tax-efficient savings vehicle will be launched, designed to help savers under the age of 40 get on the housing ladder and prepare for retirement.

Under the rules of this scheme savers can put up to £4,000 a year into the Lifetime ISA, and for every £4 they add, the Government will put in a further £1 – boosting their pot by up to £1,000 a year. For basic-rate taxpayers this is equivalent to the 20% tax relief they would get on pension contributions. The government contribution is set to cost the public purse £170 million per year. There is a charge if money is withdrawn before the saver’s 60th birthday, unless it is used for a deposit on a first home.

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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