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ISAs Explained /

What is a Lifetime ISA?

Find out more about this new type of ISA
Lifetime ISAs

Lifetime ISA

from Nutmeg

  • Protection Scheme: FSCS
  • Fund Choice: Fully Managed or Fixed Portfolios
  • Invest From: Min. Pay in from £100 to £4,000 to start your Lifetime ISA.

Why we like it: Get an intelligent stocks & shares Lifetime ISA portfolio - Choose a portfolio that’s fully managed by Nutmeg's team, or one designed to remain steady and rebalance automatically. No tie-ins, no set-up fees, no exit charges. Easy, online set up in minutes. Start with as little as £100 up to £4,000. Simple annual portfolio management fee from 0.45% to 0.75%, incl VAT. Plus, live chat, helpful customer support and really useful investor tools and guides. Nutmeg are regulated by the Financial Conduct Authority and are covered by the Financial Services Compensation Scheme. Capital at risk.

  • Nutmeg Lifetime ISA: Invest in high-quality, low-cost exchange traded funds
  • Contribute up to £4,000 per year until you’re 50
  • Get a 25% government bonus: For every £4 you invest you receive a £1 bonus
  • Use your savings to buy your first home up to a value of £450,000
  • You can contribute to both a stocks and shares Lifetime ISA and a ‘regular’ stocks and shares ISA in the same tax year
  • Must be UK resident aged 18-39
  • If you need to access your money for any other reason, you’ll pay a 25% penalty

What is a Lifetime ISA?

Announced in the 2016 Budget report the Lifetime ISA is a new kind of Individual Savings Account, launched in April 2017. 

The lifetime ISA is designed to allow people aged between 18 and 40 year old to save for both the deposit on their first property as well as their retirement simultaneously.

In addition from being able to save in a tax advantageous wrapper if a saver withdraws the money contained in the account after their 60th birthday, or use to purchase their first property they will receive a 25% bonus on their savings from the government which essentially means they could benefit from an extra £1 for every £4 they contribute to the ISA.

Lifetime ISA

Lifetime ISA Rules

Lifetime ISAs will only be available to eligible savers aged between 18 and 40 and the maximum contribution a saver can make each year will be £4,000.

In order to receive the 25% government bonus savers have to use the money contained within the ISA either for the deposit on a property as a first time buyer or for withdraw it after their 60th birthday.

If using the money within the account to buy property then to receive the bonus it must be worth £450,000 or less.

The account holder must also be considered a first time buyer which means they have never owned any kind of property before, whether in the UK or elsewhere, they also must be intending to use the house as their residence so buy to lets or other kinds of investment will not be suitable.

As lifetime ISAs are designed for individual savers it is possible to benefit from two if buying a property with someone else.

From the age of 60 the account holder is free to make full or partial withdrawals from the account, for any purpose will still being able to benefit from the 25% bonus, funds are permitted to remain invested and any interest will be tax-free.

Contributions will only be eligible to be included in the bonus up until the date of the savers 50th birthday.

Other withdrawals

Savers under 60 years old will be able to make withdrawals for other reasons than property purchase however this will not receive the bonus or interest on their savings and will need to pay a 5% charge on the amount withdrawn.

Other ISAs

Savers will be permitted to have other Kinds of ISAs, meaning it would be possible to have a cash ISAinvestment ISA and Lifetime ISA however they will all sit within the same isa allowance so you will need to ensure you do not exceed this limit. 

Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Cash ISAs

ISAs are a tax-advantageous way to save or invest, check out some of the ISA options below

ISAs Products

Fund ISAs

There are a range of types of fund ISA

Fund ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

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20th June 2017

People often ask: “what is the best investment ISA?” The answer to this question is not a simple one, with the best investment ISA for you depending on a number of factors. 

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