Although LISAs have been available through a few providers for over a year, they have not had the anticipated impact and take-up remains low.
Is this the time to reconsider LISAs suitability?
LISAs are intended to assist with one of two things, buying your first home or retirement provision.
• You can save up to £4,000 per annum and receive a 25% bonus, however there are penalties for withdrawing monies for other purposes.
• Anyone aged 18 to 39 can take out a LISA and continue contributing up to the day before they are 50. The maximum available bonus over your lifetime is £33,000.
• A LISA can be used for the purchase of a first-time property of up to £450,000.
• It can be an appropriate tax-efficient savings vehicle for parents or grandparents to use to assist their children or grandchildren.
• If a couple are both first time buyers then they can both benefit from a LISA and double the potential bonus. However, the maximum purchase
price is still £450,000.
• It can attract both regular contributions and lump sums and be invested in either equities or cash.
In late 2015 the Help to Buy ISA was introduced, and it is possible to hold both. However, a bonus can only be received through one and consideration has to be given to the use of one over the other, or the holding of both.
Primarily, if the holder of the LISA is going to purchase a home for up to £450,000, are aged between 18 and 39, but are not going to do it within a year, then the LISA will give you a larger bonus.
For retirement provision, the funds accumulated in a LISA are intended
to be accessed from age 60. Further consideration may be given to the relative benefits of a LISA compared to pensions and / or other alternative long-term savings vehicles.