A Lifetime Individual Savings Account (LISA) is used to help save for a first home, retirement, or both.
Here's a breakdown of how a LISA can be used:
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Buying a First Home: You can use the funds in your LISA, along with the government bonus, to purchase your first home. Certain conditions apply, such as the property value limit (currently £450,000) and the LISA needing to be open for at least 12 months.
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Saving for Retirement: If you don't use your LISA to buy a home, you can access the funds from age 60 onwards, tax-free. This makes it a useful tool for long-term retirement savings.
Key Features of a LISA:
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Government Bonus: The government adds a 25% bonus to your contributions, up to a maximum of £1,000 per year (based on a £4,000 annual contribution).
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Age Restrictions: You must be between 18 and 39 years old to open a LISA. You can continue to contribute until you turn 50.
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Withdrawal Penalties: If you withdraw funds before age 60 and not to buy your first home, you will typically face a withdrawal charge (usually 25%), which effectively claws back the government bonus and may mean you get back less than you paid in.
In summary, a LISA is a versatile savings account designed to help individuals achieve either their homeownership goals or save for a comfortable retirement.
