LISA tweak allows more withdrawal freedom for Contractors
The treasury announces a tweak to the new pension alternative LISA that allows freelancers greater freedom in first time housing purchases. The Lifetime Individual Saving Accounts (LISAs) was introduced in the 2016 Budget where former Chancellor George Osborne said “For the self-employed, it’s the kind of support they simply cannot get from the pensions system today.”
The new account, to be launched from April 2017 by a number of banks, is set to provide a government-supplemented pension-alternative. It provides a savings system with zero withdrawal penalty when it comes time for retirement age – the scheme will allow the penalty-free release of funds after the age of 60 – and, more recently, to put towards the deposit of a first-time home purchase.
The account will also be subsidised, subject to terms and conditions, by a 25% ‘Top-up’ provided by the government, on top of the £4,000 per-tax-year deposit limit, before your fiftieth birthday. There is no maximum monthly contribution limit and the accounts will be open to anybody between the ages of eighteen and forty.
The treasury went on to update the terms of the policy with the revelation that the conditions of withdrawal – in order to put the savings towards a housing deposit – have been tweaked, by announcing: “Individuals will be able to withdraw all of their Lifetime ISA up to the value of the deposit, including any government bonus, at the point of exchange of contracts.”
This means contractors will no longer have to wait until the completion of purchase, and can use their savings to secure the property. This went a long way in assuaging the concerns of certain banks launching the new account, especially after the announcement from Nationwide that they would not be offering LISAs.
This follows further uncertainty over the new type of account, reported by the financial times, after rumours that the launch may be delayed due to aspects of the scheme – specifically in how the taxpayer bonus will be paid – remained undisclosed.
This may not have been the increase to the maximum annual deposit limit certain contracting bodies like IPSE were calling for, but it shows the Chancellor is listening for criticism and acting accordingly. With another seven months before the reputed launch, the evolution of the account is not set in stone.
If you are a contractor or planning on becoming one or simply wish to take the stress out of managing your finances while saving time and money, then our team can help. Call today on 01442 275789 or email firstname.lastname@example.org to learn more.