Halifax Lifetime ISA
Save for your first home and retirement at the same time
Investment ISAs put your capital at risk & you may get back less than you originally invested
- Fund Choice: A range of portfolios for your Lifetime ISA suited to your chosen risk level and investment style
- Invest From: From £100 to £4,000.
Why we like it: Simple annual portfolio management fees of 0.45%-0.75% up to £100k. 0.25%-0.35% beyond £100k. There are some underlying fund costs and market spread charges. Easy, online setup. Start with as little as £100 up to £4,000. Plus, live chat, helpful customer support and really useful investor tools & guides. Nutmeg are regulated by the FCA & are covered by the FSCS. Lifetime ISA and tax rules apply. Capital at Risk. Approved by Nutmeg 09/08/2024
- Fund Choice: Choose between a Cash Lifetime ISA and get a competitive interest rate, or a Stocks & Shares Lifetime ISA to invest and grow
- Invest From: £1
Why we like it: Cash Lifetime ISA: Market-leading interest rate of 4.8% AER (variable). This includes a 3.8% base rate (variable) and a fixed one year bonus interest rate of 1%. Stocks and Shares Lifetime ISA: Get started with one of three options: Cautious, Balanced or Adventurous – and tailor your investments to align with your values. Earn 3.25% AER variable on any uninvested cash you hold within Stocks and Shares Lifetime ISA. Use handy Deposit Calculator to work out how much you need to save, and how long it’ll take you to achieve your deposit goal. Useful Jargon-busting First Time Buyer guides. There are additional fees charged directly by the fund provider. Please check the key investor information document (KIID) for a particular fund for more information. To open a Lifetime ISA you must be a UK resident aged 18-39. If you need to access your money for any other reason than your first home or retirement, you’ll pay the Government penalty
- Fund Choice: Over 2,000 Funds, Shares and ETF's
- Invest From: £25 per month
Why we like it: Start from £25 pm & save up to £4,000 pa. Wide choice of stock market linked investments or utilize investment ideas. Can be retained in cash. Simple annual management fee of 0.25%. Deal from £1.50 & never pay more than £5.00 per online deal. AJ Bell are regulated by the FCA & are covered by the FSCS. AJ Bell do not offer advice. Capital at risk
- Fund Choice: Over 3,000 Funds, Investment Trusts, Bonds, ETF's or Cash
- Invest From: £100 single or £25 per month
Why we like it: Easy to setup in a matter of minutes. Start with as little as £25 pm & save up to £4,000 pa. Wide choice of stock market linked investments, or can be retained in cash. Simple annual platform fee of 0.45%. Other charges may apply. Hargreaves Lansdown are regulated by the FCA and are covered by the FSCS. Capital at Risk
Please be aware we are not currently able to offer any Lifetime ISAs from Halifax.
Who are Halifax?
Halifax are a major high-street bank offering a range of financial products, including ISA accounts.
They are a trading division of Bank of Scotland, who are a subsidiary of Lloyds Banking Group.
Halifax offer a range of Cash and Stocks and Shares ISA products, but they do not currently offer a Lifetime ISA.
What is a Lifetime ISA?
Lifetime ISAs are a type of ISA account designed to help first-time buyers save for a deposit.
They are just like standard ISAs in that they are tax-efficient investment accounts, meaning that you don’t pay income tax or capital gains tax on your savings.
The main feature of a LISA is the free 25% bonus from HMRC that’s added to your contributions.
This is a government incentive to help people save towards buying a home; however, you are also charged for withdrawing money from a LISA if your funds aren’t used for a house purchase and you are under 60.
What are the advantages of a Lifetime ISA?
- 100% tax-free savings
- Get 25% extra added to all your LISA top-ups
- Invest in cash LISAs or stocks and shares LISAs
- Invest up to £4,000 per tax year which gets you £1,000 added by HMRC
- You can use more than one LISA for a house deposit. For example, yours and your partner’s
What are the disadvantages of a Lifetime ISA?
- You are charged 25% for withdrawals that aren’t for a first house deposit or at age 60
- Limited to add in £4,000 per person each year compared to £20,000 for standard ISAs
- Must be held for at least 12 months before withdrawing for a house deposit
- You must be age 39 or under to open a LISA
What kind of property purchase can I use my Lifetime ISA for?
There are a few restrictions concerning the specific type of home you can buy with your LISA funds, and it’s important to be aware of them before you start investing:
- You can only use your LISA for a first home purchase and not a second property
- Cannot use a LISA for buy-to-let properties
- Maximum property value of £450,000
- You must be buying with a mortgage and can’t be a cash buyer
Can I transfer a standard ISA into a Lifetime ISA?
Yes, you can transfer a standard existing ISA account into a Lifetime ISA by completing a transfer form with your new LISA provider.
However, you can only transfer up to £4,000 of a standard ISA into a Lifetime ISA in one tax year If your current ISA is worth more than this, you’ll need to transfer it over multiple tax years.
You will automatically receive the 25% bonus on the value of your ISA transfer once it arrives in your Lifetime ISA.
Which is the best Lifetime ISA provider?
The best Lifetime ISA for you depends on several factors. Here are the key ones to consider when you compare LISA providers:
- Do you want a Cash LISA or Stocks and Shares LISA?
- If a Cash LISA, what interest rates do they offer?
- If a Stocks and Shares LISA, what investments do they offer?
- What are the provider’s ongoing and ad hoc charges?
- How good are their customer service ratings and support teams?
- How user-friendly is their online platform or ISA app?
How much will I be charged to withdraw from a Lifetime ISA?
If you’re not withdrawing for a first house purchase or at age 60, you’ll be charged 25% on the value of your withdrawal.
Remember, this could be more than the original 25% bonus you receive.
For example, if you contribute £4,000 to a LISA, your 25% bonus brings your total to £5,000. If you then withdraw the £5,000 you are charged 25% on the full amount, meaning you’ll only get back £3,750.
How do I withdraw from a Lifetime ISA?
You usually fill in a withdrawal form to provide information about your withdrawal and provide the details of your conveyancer
Your Lifetime ISA provider will then contact your conveyancer to get more information on your house purchase
Your Lifetime ISA provider will then pay your conveyancer who then pays your mortgage provider for your deposit
How do I open a Lifetime ISA?
The easiest way to open a Lifetime ISA is online, and you can open your account by making a debit card contribution or setting up a Direct Debit.
FAQs
What is the annual Lifetime ISA allowance?
The LISA allowance is £4,000 for the current tax year.
Can I have a Lifetime ISA and a standard ISA at the same time?
Yes, you can open a LISA if you already have standard ISA open.
Can I contribute to a LISA if I have already used my £20,000 ISA allowance?
No. Your Lifetime ISA allowance is included in your total ISA allowance. If you contribute £4,000 to a LISA, you can only contribute a further £16,000 to a standard ISA to reach the £20,000 limit.
Am I too old to open a Lifetime ISA?
You must be between ages 18 to 39 to open a Lifetime ISA, but you can keep topping up an existing one until age 50.
Can my parents contribute to my Lifetime ISA?
No, you can only add money to your LISA yourself.
Are LISAs tax-free?
Yes, you never need to pay tax on your LISA investments.
Can I lose money in a Lifetime ISA?
If you invest in a Stocks and Shares LISA then your investments can rise and fall in value, so you could get back less than you invest.
What happens to my Lifetime ISA when I die?
Just like any other investment, upon your death, a LISA forms part of your estate and is subject to Inheritance Tax (IHT) for the beneficiaries.
Can I transfer my LISA to a standard ISA?
You cannot transfer a Lifetime ISA to a standard ISA.
Do Halifax offer a Lifetime ISA?
At the time of writing, Halifax do not currently offer a Lifetime ISA.