Savings: Britons can get £1,000 extra annually with 25% Government bonus – apply now | Personal Finance | Finance
A LISA is a tax-free savings or investments account designed to help those aged 18 to 39 to buy their first home or save for retirement. A maximum of £4,000 can be deposited into a Lifetime Individual Savings Account each tax year. The Government will then add a 25 percent bonus to a person’s savings (not including investment interest or investment growth).
However, as the tax year end nears, people only have until April 2022 to get this year’s bonus.
A person can receive this bonus up until their 50th birthday.
The 25 percent bonus is only applicable to a maximum of £1,000 per year.
People must be aged 18 or over, but under 40, to open a Lifetime Individual Savings Account.
The first payment into a LISA must be made before a person turns 40.
The limit of £4,000 counts towards a person’s annual LISA limit.
The annual LISA limit is £20,000 for the 2021 to 2022 tax year.
It is possible to hold cash, stocks or shares in a LISA, or have a combination of all three.
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When a person turns 50, they will not be able to pay into their LISA.
They will also no longer be eligible for the 25 percent Government bonus.
The account can remain open after a person turns 50.
Their savings will still earn interest or investment returns.
Only UK residents can open and continue to pay into a LISA.
The exception to this is if a person is a crown servant, for example, in the diplomatic service, or they have a spouse or civil partner that is a crown servant.
A person can withdraw money from their LISA if they are buying their first home or are aged 60 or over.
Other reasons include being terminally ill with less than 12 months to live.
There will be a 25 percent withdrawal charge if a person withdraws cash or assets for any other reason.
This is known as an unauthorised withdrawal.
Transferring the Lifetime Individual Savings Account to another type of ISA before a person turns 60 also incurs a 25 percent charge.
A reduced withdrawal charge of 20 percent was temporarily introduced in March 2020 but this ended on April 5, 2021.
