Look this is ridiculous If anyone is interested as a young person.... Saving for your dotage and taking 25% bonus is very wise. Saving for a house is always wise. Buy a f u c king holiday home.. whatever. The reality is saving is no bad thing and if tobes can find be a 25% plus return risk free like this I'm all in.. Let's see it tobes.
How is it 25% plus? It's ONLY 25% if you meet the conditions. Edit: I'm guessing you mean the interest.
Yes. I also mean if tobes can beat this deal he should name it now. This is as I said risk free... risk free I'll say it again with 25% return. Put what you can afford away guys. Even if it's just for your dotage.
The initial deposit is restricted to £1k and the monthly contribution is restricted to £200 per month (£2,400 per annum). There is no £4k per annum limit as I previously thought. It would take 60 months (five years) to save the full £12k getting you the maximum £15k return. Or 55 months (4.5years) if you put the maximum £1k deposit in initially.
It's for first home purchases only - so no holiday homes.... The only way it makes sense is if it's a young couple saving a deposit for their first home, and then it's giving them basic rate tax relief plus 5%. It makes no sense for young people thinking of doing as the title suggest as using it as a 'Lifetime ISA' and they won't be able to draw down from it until they're 60, and if they become (or already are) higher rate tax payers then they'd be better off investing their money into a pension pot and getting full tax relief at 40% on the contributions plus having the ability to decide on the level of growth / risk they want to invest their pension pot into - and they can take it at 55. So to answer your question 40% > 25% You're welcome.
You think seriously people won't have said pension.... C'mon tobes. You are just jealous you can't do one.
Really comes down to individual circumstances as to which is better. If I were a young 17/18 year old living at home with parents, I'd be taking advantage of this scheme with the intention of buying a house in the future. If you're mid-20's, are you going to save for five years before buying? Of course, you might not have a deposit and therefore little choice. Nor do you have to do the full £15k so you could save for one, two, three or four years instead. If you're 35+ than time is a issue. Most mortgage lender won't go beyond your 65 birthday. If you already have a house, you can't do it at all.
Way to miss the point..... If you're already a homeowner and a higher rate tax payer then you'd be better off sticking more into your pension pot than this 'Lifetime ISA' In your 20's and saving for a deposit - no brainer. But that scheme already existed. My wife could btw
40% is just so extreme. Its enough to make you want to move country or at least not get promotion. You could actually be worse off by a wage increase. How dare the ****ers take almost half your money - 20% is bad enough. Coupled with NI and other taxes you're hammered.
Seriously as I said. Put away what you think you won't miss and you'll not regret it. Go on a cruise or round the world or whatever the **** you want guys at 60 but don't miss out. Every young tory will be, the ****s
When I moved house the other year, I sat down and worked out how much I'd had to earn gross to pay the huge stamp duty cost - which is obviously all tax. Sickener. Or if you buy a packet of ***s - you earn £10, pay higher rate tax and NI on it, leaves you with roughly £4.90 - the ***s are say £9.80 and you're paying 75% tax as part of that. So to buy a packet of ciggies (petrol is similar) you've had to earn £20 and out of that £20 you've paid a total of £17.55 in tax or about 88% of your original income. It's ****ing outrageous.
Yeah mate put it away into a ****ing pension as it's both more tax efficient and will have a higher yield to boot. And take that cruise at 55...
40% is extreme especially when you add in all the extra taxes on other things too. You're not worse off for earning more though. You only pay the higher tax rate on what you earn OVER the threshold. If you make 46k You pay 0 on first 11.5k 6.7k on the next 33.5k .4k on the last 1k So someone earning 46k pays 7.1k in taxes. That's actually less than 20%. Naturally the more above the threshold you are the closer it gets to 40%.
There is one main benefit I can see to using this scheme as a pension saver and that's the tax side of it. Pension schemes get hammered for tax when you come to draw it out, this scheme wouldn't be taxed in the same way. However, its a long time for government changes to happen too.
If it's promised in law then it's ring fenced. The reality is Osborne knows his tax cuts are inflationary and he see this as a way of dealing with it by pushing it down the road. It's is as I said free money So put 20 quid away if that's all you can afford for the long term then one day you will turn round and say well I never missed that extra take away but this lump of cash ain't half bad now I need quadruple glazing cos I'm as old as saint and as grumpy as mito... on a good day. Don't see why taking advantage of a tory giveaway is a bad thing in any way.
You pay no tax on the 25% lump sum you can withdraw from your pension pot on retirement. You only pay tax on the annual draw down or annuity if the annual level exceeds your personal tax allowance i.e. the same as when you were working.
To a point. What if you do it for two years and then it gets changed? You could have paid £5,800 in at that point, add the 25% and it's £6k. You wouldn't be able to pay any more in (and get the 25%) because the scheme as finish but are you really going to leave the money sat there for up to forty years to gain £1,200? not convinced that's a good investment. Same goes for if it isn't closed. The maximum you can do is £12k to gain £3k from the government. That's not a great investment if you have to wait anything up to forty years for it!
Only it isn't, as has been explained to you. In your analogy re: the double glazing, you'd have been better off sticking that £20 - tax free - into your pension pot that will have a minimum average annual yield of 5%, compared to the average current ISA performance of 1.43%.
