Lifetime ISA

GiraffePencils said:
Unfortunately I only have a current account and a Help to Buy ISA right now.
So if I open the LISA I wouldn't be able to open another Cash ISA.
(Or so I believe)
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But could you not simply transfer the whole ISA savings, if £4k or less, into a LISA before the tax year end?
 
Yep.

In my case I am better off saving £200 a month and getting 3.5% than saving £400 a month and getting 0.5%

We're talking small amounts, but it's still free money.
 
I was reading http://www.moneysavingexpert.com/savings/lifetime-ISAs#property6
So I've got a Help to Buy ISA, I don't have the figure, but it's over 3k
They say I only effect my 4k LISA budget with what I've paid in in the 17/18 tax year, everything else I get without effecting it.
So really, I should just put 200 in the Help to Buy ISA and 100 in the LISA, then move it all at the end of the tax year.....
That's how I'm understanding the advice, am I right here?
 
I'm still in two minds about this if I pay the full amount into a LISA over the next 14 years to get the annual bonus and assuming a 6% P.A return on investment the time 2031 rolls around I would have paid in 69,001.12 (including the government contributions) and and would have a pot of 108K. The trouble now is I'm already a home owner so my only use would be to help fund my retirement which means not touching the pot until I'm 60 which takes to 2041. Assuming the same growth (but no more contributions) by time I'm 60 I would have a pot of 196K on top of my pension.

The one benefit here is I don't have to sell it since it's not a pension, I could withdraw all of it and find a suitable investment trust like Jupiter to manage and each year withdraw the earnings. That's a lot of assumptions to make but it seems silly to pass this up even if you are a home owner on the basic tax rate.
 
VincentHanna said:
If you aren't buying a house with it, the LISA is not a good pension option.
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Do you mind explaining why not? Surely one of the benefits of an LISA is your not forced to sell the balance for a annuity. even with tax relief it still works out better (I think)

1) 1000/12= 83.33 PCM, monthly LISA contribution 333.34
333.34+83.33=416.67

2) 333.34*20%= 66.67 PCM, month pension contribution 333.34
333.34+66.67= 400.01
 
You don't need to buy an annuity with your pension. You haven't needed to do that since 1995.

You don't get tax relief on a LISA - you get a 'bonus'. This may be subject to change in the future - governments love to meddle and the LISA was not the making of the current government, nor the one we'll get tomorrow. Hammond has already dropped some of Osborne's flagship policies. The bonus is capped at £32,000 under current rules.

Pension income tax relief on a pension is payable at your highest marginal rate, i.e. up to 45%, so there's much more available. At the moment it is pretty much identical for basic and lower rate tax payers, but then again you can only pay £4,000 per annum into a LISA. And you can only save into a LISA until you're 50.

You can't access your LISA until you're 60. You can access your pension from 55 (soon to rise to 57).

The savings in your LISA count towards access to state means tested benefits. Savings in a pension do not. Savings in a LISA count as assets in the event of bankruptcy. Savings in a pension (with a very few exceptions) do not.

Savings in a LISA can be withdrawn out free from income tax. Savings in a pension are subject to income tax, save for your 25% tax free lump sum.

Savings in LISA are subject to inheritance tax. Savings in a pension are not (technically, need not be, depending on how the pension is passed on).

Those are the key differences, I think. The pension nails the LISA pretty much every time if retirement planning is your main focus.
 
Freddie1980 said:
I'm still in two minds about this if I pay the full amount into a LISA over the next 14 years to get the annual bonus and assuming a 6% P.A return on investment the time 2031 rolls around I would have paid in 69,001.12 (including the government contributions) and and would have a pot of 108K. The trouble now is I'm already a home owner so my only use would be to help fund my retirement which means not touching the pot until I'm 60 which takes to 2041. Assuming the same growth (but no more contributions) by time I'm 60 I would have a pot of 196K on top of my pension.

The one benefit here is I don't have to sell it since it's not a pension, I could withdraw all of it and find a suitable investment trust like Jupiter to manage and each year withdraw the earnings. That's a lot of assumptions to make but it seems silly to pass this up even if you are a home owner on the basic tax rate.
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I assume you mean a S&S LISA? To achieve a 6%, are they likely to manage 6%?
 
Max out my 10pc matched work pension
And maxed out my 3.5pc help to buy (think about 4600 in there.

Rest goes I shares (not isa)
 
413x said:
Max out my 10pc matched work pension
And maxed out my 3.5pc help to buy (think about 4600 in there.

Rest goes I shares (not isa)
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You've contributed £40,000 to your pension? Or do you mean that if you contribute more your employer no longer matches.
 
Haha, same here! Also on 10% matched, pretty good these days but relatively small beer compared to the final / average salary schemes still available at some companies and in the public sector.
 
The_Abyss said:
Haha, same here! Also on 10% matched, pretty good these days but relatively small beer compared to the final / average salary schemes still available at some companies and in the public sector.
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Yeah good for today! But my step dad is on final salary! Very envious. On flip side. Know a couple renting at 31ish age with not a penny to their name and no pension!
 
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