Shifts in the savings landscape


Government incentives to save – like ISAs – are valuable

If you are aiming to buy your first home, investing in a Lifetime ISA (or LISA) could help. The recent withdrawal of the Help to Buy ISA means that the LISA is now the only tax-incentivised savings plan for first-time buyers. Existing Help to buy ISA holders can still contribute until November 2029.

You must be between 18 and 40 (inclusive) to open a LISA, and qualifying savers can invest up to £4,000 per tax year. Like other cash ISAs it grows free of tax, but also benefits from a 25% government bonus, added to the contributions made before reaching age 50. So, for every £4,000 invested, the government will add another £1,000.

The trade-off for the generous LISA benefits is the risk of a “government withdrawal charge” if you cash in your LISA before age 60, and you aren’t using the funds to buy your first home. The charge is 25% of the amount withdrawn, which can be a trap for young savers who need to access their LISA savings early.

For younger savers, the first Child Trust Fund (CTF) accounts reach maturity this September. CTFs were available to children born between 1 September 2002 and 3 January 2011, when they were withdrawn. CTFs enjoy similar tax rules to ISAs (including the new £9,000 contribution limit for 2020/21). New regulations will ensure that these continue after CTF maturity at age 18, even if the now adult account holder takes no action.

Both the maturity of CTFs and the complex rules surrounding LISAs serve as reminders that financial advice is needed at all ages.



Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances.

The Financial Conduct Authority does not regulate tax advice. Tax laws can change.




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The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.