21 Feb 2017
Could you be earning £1,000 a year from the government?
The UK Government will soon launch its new 'Lifetime ISA' saving scheme which could see young savers earn bonuses of up to £1,000 a year.
From the 6th of April, savers aged between 18 and 40 will be able to put as much as £4,000 away each year and receive a government-backed payout of 25%.
They then have two choices with the money - keep it in the saving pot until they turn 60, or access some or all of the cash to buy their first home.
There will be no monthly limit on contributions and the government will pay the bonus up until the account holder turns 50.
This means a saver who is 18-years-old when the scheme starts next month could benefit from up to £32,000 from the government.
What's the catch?
Any time from 12 months after opening a Lifetime ISA, individuals will be able to use their savings and bonus from one of the accounts towards a deposit on their first home worth up to £450,000 in the UK.
If they have a Help to Buy Individual Savings Account, they can transfer those savings into a Lifetime ISA this year or continue saving in both, but they will only be able to use the bonus from one of the accounts to buy a house.
However, if savers withdraw any of the money before they are 60 for anything other than their first home, they lose the government bonus and will be taxed 5% on the cash they have already poured in.
Independent financial advice
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Information based on our current understanding of taxation legislation and regulations, any levels and bases of, and reliefs from, taxation are subject to change.
The value of investments and income from them may go down. You may not get back the original amount invested.