The middle of December has arrived, and the countdown to the New Year is well and truly underway. The start of the year can be, for some, an opportune time to get one’s savings in order – and it may be that they want to make a note of one particular date on their 2020 calendar. This is the end of the tax year, which is also when the amount a person can still save in ISAs will rest.
Those who have a Lifetime ISA can put in up to £4,000 each year into this account, until they are 50.
The government will add a 25 percent bonus to these savings, up to a maximum of £1,000 per year.
This £4,000 limit counts towards the annual ISA limit, which is currently £20,000.
The current tax year ends on April 5 2020, with the 2020 to 2021 tax year beginning on April 6, 2020.
Paying money into an ISA before the tax year ends will result in less of the 2019 to 2020 tax year allowance being available, while saving money after this date would mean it affects the 2020 to 2021 allowance.
Who can open an ISA?
For a cash ISA, a person must be aged 16 or over, while the age requirement is 18 or older for a stocks and shares or innovative finance ISA.
A person must be 18 or over, but under the age of 40, to open a Lifetime ISA.
Otherwise, a person will pay a 25 percent charge if they withdraw cash or assets from this account for any other reason.
Some conditions apply when it comes to using these savings to buy a first home.
The savings can be used for this purpose if all of the following apply:
- The property costs £450,000 or less
- The property is bought at least 12 months after the Lifetime ISA is opened
- The buyer uses a conveyancer or solicitor to act for them in the purchase – the ISA provider will pay the funds directly to them
- They buyer purchases with a mortgage.