NatWest 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 NatWest.
Who are NatWest?
NatWest are a major UK high-street bank who are majority-owned by the UK government.
They offer a range of financial services for personal and company lending and banking, including ISA accounts for individual savers.
NatWest offer a range of ISA accounts, but they do not currently offer a Lifetime ISA (LISA) product.
What is a Lifetime ISA?
Lifetime ISAs are a type of savings account that benefit from a 25% bonus from HMRC on top of all your contributions.
For every £4 you put in, the government adds £1.
The maximum you can contribute per tax year is currently £4,000, meaning you’re eligible for a free £1,000 every year if you use your full LISA allowance.
If you buy a home with a partner, you can both utilise your own LISA allowances, meaning you can each quality for the £1,000 bonus and put your LISA savings together.
However, you must use your Lifetime ISA funds for either:
A) a deposit on a first home purchase
B) at age 60 or over
If you withdraw your LISA funds for any other purpose, you are charged 25% of your withdrawal value which could be more than the original bonus you receive.
What are the benefits of Lifetime ISAs?
The main advantage of a Lifetime ISA is the government bonus of 25%. This is an incentive from HMRC for individuals to save towards purchasing their first home.
If you’re set on buying your first home, LISAs are hard to beat as savings accounts for this purpose.
However, there are other advantages of Lifetime ISAs that you should also be aware of:
- Free from income tax
- Free from capital gains tax
- Invest in cash products to guarantee your investment won’t lose value
- Invest in stocks and shares for greater potential returns
What are the drawbacks of Lifetime ISAs?
The main drawback of Lifetime ISAs is the charges incurred if you don’t end up using your funds for a first house purchase or at age 60.
For unsolicited LISA withdrawals, you are charged 25% of the withdrawal value.
Because you’re charged 25% of the withdrawal value, this can be more than you originally put in.
For example, if you invest £2,000, HMRC tops this up to £2,500. If you then take out the full £2,500 as an unsolicited withdrawal, you’ll be charged 25% of £2,500 which comes to £625, meaning you only get back £1,875.
What type of home can I buy with a Lifetime ISA?
There are several limitations on what kind of house you can buy with your Lifetime ISA funds.
It’s worth knowing these before you invest because if you can’t use your LISA funds for your property purchase, you’ll have to either wait until age 60 or face the 25% charge.
- Must be your first property purchase
- Must be buying with a mortgage – LISAs are not applicable for cash buyers
- Limited to a maximum property value of £450,000
- You cannot use your LISA for a buy-to-let property
Can I transfer my normal ISA into a Lifetime ISA?
Yes, you can transfer your existing ISA accounts into a Lifetime ISA, but only up to £4,000 in the current tax year.
If your current ISA is over £4,000, you’ll need to transfer it partially across multiple tax years to get it all in.
You’ll also benefit from the 25% bonus on the value of your ISA transfers into your Lifetime ISA.
Which is the best Lifetime ISA?
Choosing a Lifetime ISA provider can be tricky, and the right one for you might not be the best for somebody else.
However, here’s what we think are the most important factors to consider when comparing Lifetime ISA providers:
- What investment options are available (e.g., cash or stocks and shares)?
- If choosing a Cash LISA, what interest rates are on offer?
- If choosing a Stocks and Shares LISA, what investment products do they offer?
- What are the LISA annual management charges?
- How good are their reviews?
How do I open a Lifetime ISA?
You can open a Lifetime ISA:
- Online
- Via your provider’s mobile LISA app
- Over the telephone
- With a postal application
You need to add money to officially open your account, so you’ll need to pay in via debit card or set up a Direct Debit.
FAQs
What is the annual Lifetime ISA allowance?
The current Lifetime ISA allowance is £4,000 per individual.
Can I have a Lifetime ISA and a normal ISA open at the same time?
Yes, if you already have a standard ISA, you can still open a LISA.
Can I contribute to a LISA if I have already used my full ISA allowance?
Your LISA and standard ISA allowances are linked, and you can only contribute a total of £20,000 across both products. If you’ve already added £20,000 to a normal ISA, you can’t contribute to a Lifetime ISA until the next tax year.
What is the age limit for a Lifetime ISA?
You have to be between 18 and 39 to open a Lifetime ISA, but you can keep adding money to an existing LISA until you are 50.
Can my relatives contribute to my Lifetime ISA?
No. Only you can add money to your LISA.
Are Lifetime ISAs tax-efficient?
Yes, LISA investments are completely free from tax.
Can I lose money through a Lifetime ISA?
If your Lifetime ISA invests in stocks and shares you could lose money, as your investments will fall as well as rise in value.
What happens to a LISA when you die?
Upon death, a LISA falls to the individual’s estate and becomes liable to Inheritance Tax for the beneficiaries.
Can I transfer a Lifetime ISA to a standard ISA?
No.
Do NatWest offer a Lifetime ISA?
NatWest do not currently provide a Lifetime ISA.
Frequently Asked Questions
Are LISAs tax efficient?
Yes, any dividends, capital gains or withdrawals will be 100% tax-free from a LISA.
Can I have a Lifetime ISA and a standard ISA?
Yes, you can open a LISA if you already have a Cash ISA or Stocks and Shares ISA.
Can I transfer my Cash or Stocks and Shares ISA into a Lifetime ISA?
Yes, but your transfer will be treated as a contribution and deducted from your annual £4,000 LISA allowance and so you’ll need to be careful not to accidentally contribute over the limit.
Can I withdraw money from a Lifetime ISA?
For a LISA, you will be charged 20% of your withdrawal if it is not for a deposit on a first home or over the age of 60. This is to counteract the 25% bonus that HMRC will have initially added.