Introducing LISA: 2 (and last)
If you are eligible, is it right for you?
The hybrid nature of the contract and the conditions for retaining the bonus make this decision difficult. The LISA is likely to be more attractive for 20% tax payers than for higher rate people, who will have their own personal investment and tax advice. You will need to make your own asessment of whether your first home is likely to be in the right price range and whether you will need a mortgage to buy it. Also will it be a joint purchase with someone else? Frankly, it comes down to little more than guesswork.
The best response is probably the traditional one of diversification, i.e. put some money into a LISA and some elsewhere. However, if you are approaching the age of 40, do make a small LISA payment soon to safeguard your entitlement to continue contributions up to the age of 50. All of this naturally is subject to the dubious assumption that legislation won’t change, so good luck.
My recent reblog from online friends accountshouse mentioned the very small number of LISA providers and the fact that there is only one cash LISA on the market. Given that the industry has had a full year to prepare, something is wrong. I suggest that there has been too much government chopping and changing recently regarding tax free savings and that many providers are not convinced that LISA is here to stay. The limited eligibility of the contract and fact that contributions cannot be more than £4,000 per annum don’t help either.
(23/06/2017)