Our Conveyancing Solicitors in Lytham discuss Lifetime ISAs and How to Close Them
Posted on 13th November 2023
Lifetime Individual Savings Accounts (ISAs) have gained popularity as a tax-efficient way for individuals in the UK to save for their first home or retirement. In this blog, our Conveyancing Solicitors in Lytham will delve into the world of Lifetime ISAs, shedding light on their benefits, potential drawbacks, and how to close them when the time is right.
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What is a Lifetime ISA?
Lifetime ISAs, often referred to by Conveyancing Solicitors and other professionals as LISAs, were introduced in April 2017 to help individuals aged 18 to 39 save for their first home or retirement. They come with a government bonus of 25% on your contributions, making them an attractive option for those looking to grow their savings over time. The maximum annual contribution limit is £4,000, up to the age of 50, and the Government Bonus is capped at £1,000 per year.
What are the benefits of a Lifetime ISA?
Government Bonus
The 25% government bonus can significantly boost your savings, helping you reach your financial goals faster.
Tax-Efficiency
Contributions to LISAs are made with after-tax income, and withdrawals are tax-free, making them a tax-efficient savings option.
Versatility
You can use the funds for either your first home purchase or save for retirement, providing flexibility in your financial planning, if you’re not quite sure what you want to use your money for straight away.
How do you close a Lifetime ISA?
Closing a LISA can be required for various reasons, such as you are ready to buy your first home, reaching retirement age, or simply wanting to access your savings. The process typically involves the following steps:
Contact Your LISA Provider
Get in touch with your LISA provider to initiate the closure process. They will guide you through the necessary steps.
Provide Required Information
Your provider may ask for documentation, such as proof of your first home purchase or proof of age if you're closing your LISA for retirement.
Receive Your Savings
Once the closure process is complete, your savings, including any government bonus, will be transferred to you. Keep in mind that if you withdraw funds for reasons other than your first home, retirement before age 60, or if you are diagnosed with a terminal illness and have less than 12 months to live, you may incur a 25% penalty on the amount withdrawn.
There is something that is not generally known by our Conveyancing Solicitors in Lytham’s clients: if you withdraw the money from your LISA to purchase a property over a certain value, you will be charged a 25% withdrawal fee, meaning not only do you lose the Government’s bonus, but you actually get charged 25% of your savings.
What are the requirements to receive the LISA bonus?
You must purchase a property worth £450,000 or less
You must not purchase within 12 months of opening your LISA to claim the bonus
The funds must be paid to your Conveyancing Solicitor directly
You buy with the assistance of a mortgage
So, for our Conveyancing Solicitors in Lytham, who act for many first time buyers, who in this property market have ended up spending slightly more than they anticipated, they could end up paying to withdraw the money they have worked hard to save.
Why choose MG Legal Solicitors?
Transparent fees.
Our solicitors offer their services on a clear fixed-fee or hourly rate, and accept personal injury claims on a no win no fee basis.
We are the experts.
Here at MG Legal, our team of friendly solicitors are fully-qualified and have over thirty years' experience in helping clients just like you.
Regular communication.
When you work with MG Legal, your solicitor will be in regular contact so you have step-by-step updates.
Multiple office locations.
If you are looking to instruct our solicitors, we have offices in Garstang, Longridge, Lancaster and Lytham for your convenience.
Conclusion
Lifetime ISAs offer a valuable savings opportunity for individuals in the UK, with the potential for a significant government bonus. However, it's crucial to stay informed about the latest updates and consult experts, like a financial advisor, for personalised financial advice. When the time comes to close your LISA, speak to your Conveyancing Solicitors in Lytham on 01253 202 452 for more information about how to proceed.
Why choose MG Legal, Conveyancing Solicitors in Lytham?
Clear, fixed-fees
Fully-Qualified Conveyancing Solicitors
Tailored Service
Multiple Office Locations
Decades of Experience
Home Visits
Tagged as: Conveyancing, Solicitors in Lytham
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