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Budget: Savers benefits

Enable’s IFAs in Bishop’s Stortford can see no downside to the new annual ISA limit being raised from £15,240 to £20,000 with a new “lifetime” ISA to help the under 40’s save by the government giving them £1 for every £4 saved and people who save a maximum of £4,000 towards a home deposit or retirement will get a £1,000 top-up from the state every year until they turn 50.

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These also sit interestingly alongside the new personal savings allowance (PSA), available from April 6 which allows savers to earn £1,000 interest (for basic-rate taxpayers) or £500 (higher-rate) tax-free per year.  Under the PSA, returns on non-Isa savings within the tax-free limit look to be greater than the returns offered by ISAs, because rates paid are generally higher.

But is the Lifetime Isa just another version of the Help to Buy Isa it looks pretty much as though it is but it’s a slightly better version.  The contribution limit of £4,000 is higher than Help to Buy and it can be invested in shares as well as cash and here is no restrictive maximum bonus figure (£3,000 for the Help to Buy Isa). A bonus will be paid on contributions made up to the age of 50, although there will be a consultation for bonuses on contributions beyond that age.

If you have already opened a Help to Buy ISA you will be able to transfer the balance to a Lifetime ISA, according to the Treasury, you will receive the 25pc bonus on the full balance. As a vehicle to save for a first property, this looks like quite a good option.

Source: The Telegraph

Issued by: Enable Independent Financial Life Planners • 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 – Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
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