Compare Latest Lifetime ISA Deals
Why we like it: Simple annual portfolio management fee from 0.45% to 0.75%, incl VAT. There are also some underlying fund costs and market spread charges. Easy, online set up in minutes. Start with as little as £100 up to £4,000. Plus, live chat, helpful customer support and really useful investor tools and guides. Nutmeg are regulated by the Financial Conduct Authority and are covered by the Financial Services Compensation Scheme. Capital at risk.
Disclaimer: The value of your investments can fall as well as rise, so you could get back less than you paid in.
What is a Lifetime ISA?
Announced in the 2016 Budget report the Lifetime ISA is a new kind of Individual Savings Account, launched in April 2017.
The lifetime ISA is designed to allow people aged between 18 and 40 year old to save for both the deposit on their first property as well as their retirement simultaneously.
In addition from being able to save in a tax advantageous wrapper if a saver withdraws the money contained in the account after their 60th birthday, or use to purchase their first property they will receive a 25% bonus on their savings from the government which essentially means they could benefit from an extra £1 for every £4 they contribute to the ISA.
Lifetime ISA Rules
Lifetime ISAs will only be available to eligible savers aged between 18 and 40 and the maximum contribution a saver can make each year will be £4,000.
In order to receive the 25% government bonus savers have to use the money contained within the ISA either for the deposit on a property as a first time buyer or for withdraw it after their 60th birthday.
If using the money within the account to buy property then to receive the bonus it must be worth £450,000 or less.
The account holder must also be considered a first time buyer which means they have never owned any kind of property before, whether in the UK or elsewhere, they also must be intending to use the house as their residence so buy to lets or other kinds of investment will not be suitable.
As lifetime ISAs are designed for individual savers it is possible to benefit from two if buying a property with someone else.
From the age of 60 the account holder is free to make full or partial withdrawals from the account, for any purpose will still being able to benefit from the 25% bonus, funds are permitted to remain invested and any interest will be tax-free.
Contributions will only be eligible to be included in the bonus up until the date of the savers 50th birthday.
Savers under 60 years old will be able to make withdrawals for other reasons than property purchase however this will not receive the bonus or interest on their savings and will need to pay a 5% charge on the amount withdrawn.
Savers will be permitted to have other Kinds of ISAs, meaning it would be possible to have a cash ISA, investment ISA and IF ISA however they will all sit within the same isa allowance so you will need to ensure you do not exceed this limit..