How can you get a 25% return from the government? The new Lifetime ISA may have the answer.
George Osborne's newly announced Budget was full of optimism and an overarching commitment to "put the next generation first". This was particularly evidenced by the introduction of a new Lifetime ISA, aimed at the under-40s.
From April 2017, this flexible savings option will allow individuals who are between the ages of 18 - 40 to open a Lifetime ISA and save up to £4,000 per annum until the age of 50.
And what's the "bonus"? For every £4 saved, the government will contribute £1 (up to maximum of £1,000) which equates to a 25% increase – far better than the low interest rates widely available elsewhere. The fund can be accessed at any time, but if money is withdrawn, the bonus (and any interest or growth on this) is forfeited and a 5% charge will be incurred. If the money is redeposited, the bonus is reinstated.
And what's the catch? The Lifetime ISA bonus is only secured if you use Lifetime ISA as a deposit on a first home (worth up to £450,000) or on retirement. The details of withdrawal for other purposes are still being ironed out.
Other significant changes helping to keep your hard earned pennies in your pocket include an increase in the ISA allowance from £15,000 to £20,000 per year from this April and an increase in the personal allowance to £11,500 from April 2017.
I will confess that my initial excitement has been tempered a little as I have delved into the detail, but any encouragement to my generation to save for the future has to be a good thing' at the end.
If you would like any further information in relation to the above or another Private Law matter, please contact Elysa Jacobs.