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THE EDUCATION SECTIONMay 2017With each News & Views we look at a particular financial topic in a little more detail. This month it is the Lifetime ISA & the Help to Buy ISA____________________________Meet LISA.•Starting a relationship with LISA may work out, but beware, it might turn out to be a ‘fatal attraction’. •The Lifetime ISA (LISA) is to be a new option for those aged between 18 and 40 saving for retirement or a house deposit. Introduced on 6 April 2017, those eligible are able to save up to £4,000 each tax year and receive a 25% bonus at the end of the year from the government. As with a regular ISA, the money grows tax-free.•The pot can be used to buy a first home of up to £450,000 at any time from 12 months after opening the account. Accounts are limited to one per person rather than one per home – so two first time buyers can both receive their 25% bonus when buying together. Alternatively, or in addition, the pot can be withdrawn tax free from age 60 for use in retirement. Any savings added before age 50 will also receive the 25% bonus.•A further option is withdrawing the money at any time before you turn 60, but there are penalties. The government bonus, and any interest or growth on that bonus, would be lost - and there would be a 5% charge on top. Ouch!The FAQs about LISA•What can I hold within a LISA? QualifyinginvestmentsinaLifetimeISAarethesameasforacashorstocksandsharesISA.Pleaserefer to our ISA guide which explains more about this.•Can you have an ISA and a Lifetime ISA?Yes.However,thetotalamountyoucansaveeachyearintoallISAsis£20,000fromApril2017-£4,000 of which can be to a Lifetime ISA.•Can I transfer existing ISA’s into a LISA?ItispossibletotransfersavingsfromotherISAsasonewayoffundingaLifetimeISA.Inlinewithexisting rules, transfers from previous years’ ISA contributions will not affect that year’s overall ISA limit.•What about Help to Buy ISAs?HelptoBuyISAswillstillbeavailableuntilNovember2019.ItwillbepossibletoopenaLifetimeISA alongsideaHelptoBuyIsa.However,itwillonlybepossibletousethegovernmentbonusfromoneof these accounts to buy a first home.•Can I transfer my Help to Buy ISA into LISA?Duringthe2017-18taxyearonly,thosewhoalreadyhaveaHelptoBuyISAwillbeabletotransferthese funds into a Lifetime ISA and receive the government bonus on those savings.•Should I still save into a pension if I am between 18-40?Thecombinationoftaxreliefalongwithanyemployercontributionislikelytomeanthatpensionsarein manycasesmathematicallyabetteroptionforthosepurelyfocusedonsavingtowardsretirement– especiallyforhigherearners.However,ifenacted,theLifetimeISAcouldbeusedasanalternative,oran additionto,pensionsavingsandallowtheyoungergenerationto‘mixandmatch’theadvantagesof pensioncontributionswithanew,enhancedISAtomaximisesavings.Forthoseunder40facingthe difficultchoiceofwhethertosaveforafirsthomeorforretirementtheflexibilityoftheproposedLifetime ISA offers a potential solution.Help To Buy ISAs at a glance•HelptoBuyISA’swerelaunchedbytheGovernmenttoencouragepeopletosavefortheirfirsthome,they will,intime,bereplacedbytheLifetimeISAorLISAwhichoffersthesametaxadvantagesastheHelpTo BuyISA,butofferstheflexibilityofsavingforeitheranewhomeoryourretirement,albeititshouldbe notedthepenaltiesforwithdrawal(otherthantobuyanewhomeorbeforeage60)aremorepunitiveon the Lifetime ISA.•The key pointsoFlexible saving for your first home.o25% tax free from the Government on whatever you save. oAvailable to those aged over 18 who are saving for their first home. oNew plans available until December 2019, with ongoing savings available until December 2029 oPay in up to £200 per month (£1,200 in your first month)For a detailed overview from HMRC of the lifetime ISA and its interaction with Help to Buy ISA’s click here. As always, please do not hesitate to contact us if you would like further details or information.