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Understanding Lifetime ISAs

Lifetime ISAs (LISAs) can only be opened by those who are 18 or over and under 40. Those with a Lifetime ISA can save up to £4000 per tax year, with the Government adding a top up of 25%. The rules on what the LISA investment can be used for are complex, leading HMRC to undertake two surveys into the use, or non-use, of LISAs.

Those who are eligible to hold a LISA but do not do so, gave the prime reason for not setting up this type of investment as not having enough spare funds (26%). Interestingly, of the 30% who don’t currently hold a LISA but may do so in the future, 42% said that a change in the LISA withdrawal rules would help to motivate them to open an account.

Those who already have a LISA cited the benefit of tax-free interest (92%) and the government bonus (98%) as being the prime factors in opening their account. LISA holders also were more likely to already have savings and investments elsewhere with just 2% saying that the LISA was their sole savings method.

If you are looking for advice on investments or if your situation has changed and you may therefore need to review your existing pensions or investments, contact Beckworth by using one of the links on our website.