THE NEW LIFETIME ISA (LISA)
The LISA will replace the help to buy ISA in a general move from the government which we are certain will eventually lead to a choice between a LISA with 20% tax incentive going in, tax free growth and tax free incomer, versus a pension with say 30% fixed tax incentive going in, tax free growth and taxable income.
The basics of the LISA are that you have to be over 18 and under 41 to subscribe, you can invest up to £4,000 this tax year (£5,000 next tax year) and you will get a 20% government incentive added tio your funds.
The only benefit of a LISA is if you are a first time house buyer or if you want to maximise pension savings and can wait to draw down funds until age 60 or later. Otherwise the penalties for early mean you would probably have been better in a normal ISA.
The new product is more interesting as a guide to the future intentions of George Osborne with regard to long term savings at present, the increase of ISA contributions to £20,000 pa does however mean that most people will be able to shelter most of their long term savings in a tax free environment.
For those who want to know more Standard Life do a very helpful comparative table WEF next tax year which we have reproduced here.