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Lifetime ISA
You can save up to £4,000 every year in a Lifetime ISA. You can put as much or as little in as you want each month (subject to the maximum amount and this will count towards your annual ISA limit) until you reach 50 and you’ll also get an extra 25% bonus from the Government on top of what you save each year.
You must be 18 or over and under the age of 40 to open a Lifetime ISA.
You can put the money you save in your Lifetime ISA towards buying a home if you’re a first time buyer. You can also transfer any savings you have in a Help to buy ISA into your Lifetime ISA, but you’ll only be able to use the bonus from one ISA. Two first time buyers can use both their savings and the bonus when buying together because limits apply to each person and not to each household.
You can also use the Lifetime ISA to save for your retirement. You can take out all your savings and the extra 25% from the government after your 60th birthday, tax free. You can withdraw the money from your ISA at any time before you turn 60, but you will have to pay a 25% fee. You don’t have to pay the fee if you use the money to buy your first home or if you’re terminally ill (with less than 12 months to live).
Innovative Finance ISA
Innovative finance ISAs includes ‘peer to peer’ loans, which are loans that you make to other people or businesses without using a bank. Only loans made through a peer to peer lending website can be included in an innovative finance ISA and you can’t transfer any peer to peer loans you’ve already made into these ISAs. One problem that might occur with this ISA is if the people you lend to can’t pay you back, so it’s important to check it’s the right option for you. Peer-to-peer platforms are not protected by the Financial Services Compensation Scheme.
Make more of existing iSAs
For investors who already hold ISAs, making the most of what they already have will be just as important as ensuring each year’s allowance is used in full.
If you have a number of different ISA’s you may want to transfer them to keep them in one place. It’s important to check if you might have to pay a penalty for transferring your money. We can help you work out if the benefits of transferring to a new provider will be beneficial to you.
ISAs can be transferred without losing the ISA ‘tax free wrapper’ or affecting your annual allowances. It is possible to transfer money between Cash, Stocks & Shares, and Innovative Finance ISAs as you want.
transferring old Cash ISAs
With interest rates at historic lows and inflation rising, a number of investors are transferring their Cash ISAs to Stocks & Shares ISAs for potentially greater returns.
Savers happy with the additional risks and investing for the long term could consider transferring to a Stocks & Shares ISA. Be aware unlike cash, investments can fall as well as rise in value so you could get back less than you invest. You should also make sure you have sufficient cash to cover emergencies before transferring.
