Once a person turns 50, it’s no longer possible to pay into the Lifetime ISA, or earn the 25 percent bonus.
However, the account will remain open, and savings will still earn interest or investment returns.
To open and pay into a Lifetime ISA, the person must be resident in the UK, unless they’re a crown servant, or their spouse or civil partner.
Those who save in their Lifetime ISA will see the Government then add a 25 percent bonus to their savings within it.
This is up to a maximum of £1,000 per tax year.
It’s also important to remember this £4,000 Lifetime ISA limit counts towards the annual ISA allowance – which is £20,000 for the 2021 to 2022 tax year.
As the Lifetime ISA is intended to save either for a first home or for later life, there are rules when it comes to withdrawing the money.
GOV.UK explains: “You can withdraw money from your ISA if you’re:
- Buying your first home
- Aged 60 or over
- Terminally ill, with less than 12 months to live.
“You’ll pay a withdrawal charge of 25 percent if you withdraw cash or assets for any other reason (also known as making an unauthorised withdrawal).”
This recovers the Government bonus received on the original savings, and the amount available to take out is less than what was put in.
If a person is using the money to buy their first home, to ensure the “unauthorised withdrawal” charge doesn’t apply, the following must apply:
- The property costs £450,000 or less
- The property is bought at least 12 months after making the first payment into the Lifetime ISA
- The buyer uses a conveyancer or solicitor to act for them in the purchase – the ISA provider will pay the funds directly to them
- The property is bought with a mortgage.
This post originally appeared on Daily Express :: Finance Feed