Halifax Help To Buy ISA
Save for your first home and retirement at the same time
Investment ISAs put your capital at risk & you may get back less than you originally invested
- Protection Scheme: FSCS
- Fund Choice: A range of portfolios for your Lifetime ISA suited to your chosen risk level and investment style. Capital at risk.
- Invest From: From £100 to £4,000.
- Protection Scheme: FSCS
- Fund Choice: Over 2,000 Funds, Shares and ETF's. Capital at risk.
- Invest From: £25 per month
- Protection Scheme: FSCS
- Fund Choice: Over 3,000 Funds, Investment Trusts, Bonds, ETF's or Cash. Capital at risk.
- Invest From: £100 single or £25 per month
From April 2017 all eligible savers between the ages of 18 and 39 have had the option of opening a Lifetime ISA.
A Lifetime ISA a new type of account which is designed to help young people to save for both their first home and for their retirement simultaneously. You can contribute up to £4,000 into this ISA in each tax year, the government will then provide a 25% bonus on these contributions at the end of the tax year, this means savers can gain an extra £1 for every £4 they save, so those who save the maximum each year will receive a £1,000 bonus on their savings each year.
The money held within the lifetime ISA can be used to either pay for part, or all of a first time home or it can be used to save for retirement. Savers will be able to benefit from earning the bonus on their contributions until the age of 50 years and will be able to have a maximum individual contribution of up to £128,000 which can be matched by the government, to a maximum of £32,000.
This provides a logical incentive to begin saving for your future.
You will be able to transfer your ISA to another provider and it should take no longer than 30 days.
Making Withdrawals from a Lifetime ISA
You can withdraw the money at any time before you turn 60. However, you will lose the government bonus, the interest on this bonus, and pay a 5% charge. Therefore, you should only invest in this type of ISA if you’re confident that you will be able to leave the money untouched. If you’re likely to need the money before then, then a Cash ISA may be of more use as you would not lose your interest.
Using a Lifetime ISA to Purchase a First Home
Savers will be able to contribute to one Lifetime ISA in each tax year, as well as a cash ISA and stocks and shares ISA. This gives you a wider pool of options when planning your savings, particularly if you’re unsure whether you’ll need to withdraw your savings before the age of 60 but would still like to pay in to a Lifetime ISA.
You can use your ISA to fund your first home, details below:
- Funds can be used to buy a first home, up to £450,000, from a year after opening the account and can be withdrawn from age 60 to fund retirement
- If someone is using their Lifetime ISA to buy a first time home with someone else they can both use their lifetime ISA and benefit from the government bonus
- If the saver does not use all of their lifetime ISA savings on the purchase of their first home, then any leftover including the government bonus can be used to fund their retirement
- If you have a Help to Buy ISA you can transfer those savings into a Lifetime ISA or continue saving with both, however you will only be able to use the bonus from one of the schemes to fund the property purchase
Using a LIfetime ISA for Retirement
Full or partial withdrawals can be made from the age of 60. The money can be used for any purpose and will be paid free of tax, funds are permitted to remain invested and any interest and investment growth will be tax-free. Withdrawals are also tax-free.
You will also be able to pass on your lifetime ISA to a spouse or civil partner. Additionally, family are able to pay in to a lifetime opened by a child or grandchild. This can be used as part of inheritance tax planning.
You can open a lifetime ISA with a bank, building society or investment broken since April 2017. However, not all providers are planning to offer this product immediately.
Frequently Asked Questions
Am I committed to one ISA provider forever?
No. You can switch providers with an ISA transfer if you wish. You can also contribute to other ISA providers in separate tax years.
Are ISA accounts safe?
ISA accounts are authorised and regulated by the Financial Conduct Authority (FCA). This means that all ISA providers are covered by the Financial Services Compensation Scheme (FSCS) for up to £85,000 if they go out of business.
Please note that this may not apply to the underlying holdings within a Stocks and Shares ISA, and will not cover standard investment losses.
Can I lose money in an ISA?
You can lose money in a Stocks and Shares ISA if your investments go down in value. You cannot lose money with a Cash ISA.
Can I withdraw money from an ISA?
You can withdraw money from a Stocks and Shares ISA at any time provided that you sell the underlying investments first.
You can withdraw from a variable-rate Cash ISA at any time.
Withdrawing from a fixed-rate Cash ISA may incur charges if you do so before the end of the specified fixed term.
How do I withdraw money from my ISA?
Most providers will allow you to withdraw from your ISA online, via a mobile app, telephone, or by written instruction in the post.
How long does it take to withdraw from an ISA?
Most ISA withdrawals will complete in approximately five working days, but they could take longer depending on the assets you need to sell.
How much can I contribute to an ISA?
The annual ISA allowance is set by HMRC each year, and the current limit is £20,000 per person for the 2023/24 tax year.
When does the ISA tax year run to?
The annual ISA allowance runs in line with the normal tax year, which is 6th April to 5th April the following year. Your ISA allowance will refresh on 6th April each year.
Will I be charged for an ISA?
A Stocks and Shares ISA provider will charge an ongoing, annual platform fee as well as some ad hoc charges.
A Cash ISA could also charge if you withdraw money before the end of a fixed-term investment.