Who is LISA, and what’s she got to do with me?

By Rachel Efetha. Chartered Financial Planner.

It’s not who, it’s what is LISA.  It’s the Lifetime Individual Savings Account.  These accounts are on offer for those aged between 18 -39 (but don’t stop reading if you’re over 39!). Providing the proceeds are used towards a deposit for a first time buyer, or towards retirement after the age of 60, then the government will add an extra 25% bonus into your account.

So, if you’re aged over 18 and haven’t yet bought a house, start saving into a LISA straight away to get tax relief on your deposit – amazing!  You can save a maximum of £4,000 per year into one.  I recommend that as soon as you start full time work, you put at least £100 pm into one, increasing that in line with pay rises as you go.  If you start from your first payday, you will never have had that £100 and so won’t miss it.

As it will take you up to ten years to save for a decent deposit in this way, I’d recommend that you opt for a stocks and shares LISA, this could get you the best return initially. Then think about moving it in to a cash LISA a couple of years before you want to get serious about buying  somewhere. This will help to protect you from any short term falls in stock markets.

If you’ve already bought your first property and are under 39 and a basic rate taxpayer, you might want to think about paying into a LISA for retirement (in addition to your workplace pension, not instead of).  This is because you’re limited to 25% tax free cash on a pension, whereas you can take the whole LISA out tax free once you reach age 60.  However, you only get the 25% bonus from the government so if you’re a 40% or 45% taxpayer then a pension is best for you.

But I’m over 39, why am I still reading this?

Because you might have children or grandchildren, and you might want to help them on to the property ladder by gifting them money towards a deposit.  Instead of waiting, say, five years and giving them £25k, how about giving them £4k a year for five years specifically for them to pay into a LISA, and they will have their £25k at the end of it – but it’s only cost you £20k!  You don’t get many tax breaks so why not take advantage of this one?

How Anstee & Co. can help you with your LISA.

If you would like to find out more why not arrange a meeting with one of our financial advisers? Our experience covers all aspects of financial planning including pensions, estate planning, investments and mortgages. The initial meeting is at our cost and is without obligation. So, why not contact us today? A meeting can be arranged at a time that is convenient for you.

Our Head Office is situated in Kettering. Additionally, our financial advisers make use of meeting rooms in-

• Bedford
• Market Harborough
• Wellingborough
• Towcester
• Northampton

There is no need to visit an office as all work can be handled remotely over the phone or using video conferencing such as Zoom.

If you have any thoughts or comments about Rachel’s article, “Who is LISA, and what’s she got to do with me?”, then we would love to hear from you.

Finally, the information contained in this article is for information purposes only and does not constitute financial advice. Anstee & Co. is authorised and regulated by the Financial Conduct Authority (FCA).