Today’s question comes from Matthew in London.
“I’ve heard about something called a Lifetime ISA. Apparently if you put cash into one of these, the government makes a contribution of 25% of whatever you put in. I’m currently just turned 30 but I’ve worked since the age of 16 and I’m not the type of the guy the government usually hands out free money to! Can I REALLY get one of these?”
The Lifetime ISA is the latest member of the ISA family of tax-free accounts. You need to be under 40 to qualify for one and they’re really intended to help people save for one of two purposes: either to buy their first house, or to save for retirement.
But in answer to your question, if you’re under 40, YES you are eligible. Whether you’re unemployed or make £1 million a year, the government will contribute 25% of whatever amount up to £4000 you choose to save.
You can save up to £4000 per year and while you need to be under 40 to open one, you can continue saving into it until you’re 50.
So for you Matthew, who’s just turned 30, that’s potentially £20,000 free from the government.
There are strings on the property purchase too.
You can buy a ‘qualifying’ property if you’re a first time buyer. The value of set property cannot exceed £450,000.
Otherwise, you can draw the money when you’re 60. But unlike a pension, it’s tax free when you draw it as well as when you save into it.