On 30 November 2019 the Help-to-Buy ISA will close to all new applicants. However, this isn’t all bad news, the government has set up an alternative ISA known as the ‘Lifetime ISA’.
The two ISAs have many similarities, with the Lifetime ISA having a few more benefits. The key details of the two ISAs are outlined below:
| Help to Buy ISA | Lifetime ISA | |
| Who can have the account? | Anyone over the age of 16 who has never owned a property. | Anyone aged 18 to 39 but if you want to use the money to purchase a house you can't have owned a home before. |
| What kind of ISAs are there? | Cash ISAs only. | Cash ISAs and Stocks and Shares ISA. |
| How much can you pay in each year? |
£3,400 in the first year and £2,400 per year from the second year onwards. This counts towards your ISA allowance of £20,000 per tax year |
£4,000 per year. This counts towards your ISA allowance of £20,000 per tax year. |
| What bonus is paid? |
25% of your contributions up to a maximum of £3,000. |
25% of your contribution. |
| When is the bonus paid? | Paid to your solicitor on completion of your property purchases. | Paid into the ISA account every within a month of the contribution being made. |
| Value restrictions on properties bought | The property must cost a maximum on £450,000 in London and £250,000 outside of London. | The property must cost a maximum of £450,000 no matter where in the UK it is located. |
| Can I withdraw/transfer the ISA money without buying a property? | Yes – but you won’t receive the bonus on the money you withdraw. |
Yes – but you will be charged a 25% penalty on the withdrawal amount. You can also use this ISA to save for retirement. Withdrawals can be made without penalty once you are 60 years old. |
If you are interested in getting a Help-to-Buy ISA for yourself or your child, make sure you register before Saturday 30 November 2019. If you have an account by this date, you can continue to contribute into the ISA until December 2030.
If you have any questions or want any advice on this, please contact Andrew Tricker andrewtricker@lfwm.co.uk or 0207 490 7766.
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