Lifetime ISA saving can help those who are looking to buy a house in the future, a goal which can seem more distant for those spending on rent. With rent often forming a major outgoing for individuals who do not own their own home, it can be difficult to put money aside for the goal of purchasing a property. However, a Lifetime ISA could be an appropriate solution to help Britons in their progression towards this outcome.
A Lifetime ISA Government bonus is automatically added to a person’s Lifetime ISA account every month.
However, while Lifetime ISAs could help people saving towards a home, or indeed retirement, there are also key withdrawal rules to bear in mind.
Britons will only be able to withdraw the money in the following circumstance:
- To help purchase a first home worth up to £450,000
- From the age of 60
- If a person becomes terminally ill
However, if a withdrawal is made for any other reason, Britons will be forced to pay an exit charge.
But the lowered withdrawal charge is set to revert back to 25 percent on April 6, 2021, leaving just months on the current policy.
Understandably, the Lifetime ISA withdrawal charge could set Britons back on their journey towards saving for a home.
For this reason, then, some are calling upon the Government to reconsider its approach to the charge.
Investment service Hargreaves Lansdown has started a petition to keep the reduced LISA withdrawal charge, urging the Treasury to make this permanent.
Indeed, this is a sentiment shared by investment platform AJ Bell.
Tom Selby, senior analyst at AJ Bell, commented on the matter saying: “The increase in the exit penalty will likely be happening at the same time as millions of employees are being moved off furlough support and facing huge financial insecurity.
“While some jobs will remain viable as the UK economy hopefully begins to open up, many will sadly be lost. Anyone facing unemployment at this time may well need to use their savings to make ends meet – including money set aside for the future in a Lifetime ISA.
“As a minimum the Government should keep the exit charge at 20 percent for the 2021/22 tax year. But a preferable solution would be to make the reduction permanent, meaning the aim of the charge would simply be to return the upfront bonus.”