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Help To Buy ISAs

A little extra help to get yourself onto the property ladder.

Help to Buy ISA's were withdrawn from December 2019.

Help to buy ISA

Help to Buy ISA's were a way of saving to get the deposit to buy your first home. You could earn interest on the money you deposited into the account and if you used the ISA for the deposit on a house the government would boost your savings by 25% contributing up to a maximum of £3,000 towards it. The most comparable product now available is the Lifetime ISA, details can be found below.

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 IF ISA however they will all sit within the same isa allowance so you will need to ensure you do not exceed this limit. 

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