Latest news with #LifetimeIsas
Metro
26-05-2025
- Business
- Metro
Warning as building society to cut interest rates on dozens of accounts
Rates on 37 personal savings accounts will be slashed (Picture: Getty) A large building society is planning to cut interest rates on dozens of personal savings accounts. Newcastle Building Society is dropping rates on 37 of the personal accounts they offer by 0.25%. The change comes after the Bank of England reduced interest rates to 4.25% in early May. Banks tend to look at the base rate when deciding their own savings rates, and lower inflation meant people could stash more money away with a higher return. Newcastle Building Society is following suit, and the changes will affect many of the savings accounts it offers. The Newcastle Cash Lifetime ISA will be lowered to 2.45%, and the Double Access Saver/ISA will be at a new rate of 3.80%. The move follows the Bak of England's lower interest rates (Picture: Getty) The Regular Saver Plus will drop to 2.25%, and the Newcastle Junior Cash ISA is now 3.5%. The building society said: 'These changes will come into effect on June 5th. Members with fixed-rate savings accounts will see no changes to their interest rate.' Many other banks are also cutting their savings rates, so now may be a good time to go hunting for some decent deals if you're looking for somewhere to place your savings. This time last year, the Bank of England interest rate was at 5.25%- its highest point since the beginning of the financial crisis in 2007. That only started to change in the summer, with a 0.25% reduction – the first cut in more than four years – coming in August. The rate fell another 0.25% in November, as the Bank became increasingly confident that inflation was under control. At the next Monetary Policy Committee meeting in February, a further 0.25% decrease was agreed. Bailey said the Bank would be taking a 'gradual and careful approach to reducing rates further' for the rest of 2025. Get in touch with our news team by emailing us at webnews@ For more stories like this, check our news page. Arrow MORE: Wear a uniform to work? You could be owed hundreds of pounds from the government Arrow MORE: Six simple tips that can save you £60 on your phone bill Arrow MORE: How first-time buyers can save more than £50,000 for deposits in Lifetime Isas
Metro
22-05-2025
- Business
- Metro
How first-time buyers can save more than £50,000 for deposits in Lifetime Isas
First-time buyers are saving up more than £50,000 to put towards the deposit on their home, new figures have revealed. Lifetime Isas, also known as Lisas, were launched to help people get their foot on the property ladder. And new figures from HMRC show the top 25 Lisa withdrawals to buy a home averaged at £51,000 in 2022-23. The figures were revealed thanks to a freedom of information (FOI) request made by money app Plum. Rajan Lakhani from Plum, which is offering a 4.75% Lisa rate, said: 'Against a backdrop of recent global volatility it's reassuring to know the Lifetime Isa can deliver stunning gains, regardless of the broader economic outlook. 'And don't forget that this government boost comes in addition to any interest you earn on savings.' You can access completely fee-free mortgage advice with London & Country (L&C) Mortgages, a partner of Metro. Customers benefit from: – Award winning service from the UK's leading mortgage broker – Expert advisors on hand 7 days a week – Access to 1000s of mortgage deals from across the market Unlike many mortgage brokers, L&C won't charge you a fee for their advice. Find out how much you could borrow online Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage. The HMRC figures only included withdrawals which were eligible for the government bonus when it provided the figures. More than 42,800 Lisa withdrawals to buy a home in the 2022-23 financial year were for £10,000 or more, and more than 11,200 of those were for £20,000 or more. However, there are some catches when it comes to buying property with a Lisa deposit. If you've ever owned a property before, whether inside or outside of the UK, you can't use a Lisa towards your home purchase – even if it was an inherited property that you sold straight away and never lived in. And Money Saving Expert Martin Lewis has warned that the £450,000 threshold is a 'serious hole' in the Lisa scheme, calling it 'unfair' and 'off-putting'. Lifetime Isas, otherwise known as Lisas, can be opened by anyone aged between 28 and 39. They can be used to save up to £4,000 a year, which can either be spent on a first home costing up to £450,000, or for retirement after you hit the age of 60. The state adds a bonus of up to £1,000 per year on top of that, plus you earn interest on whatever you save, and that interest is tax free. You must have had your Lisa for at least a year to be able to use it (and the government bonus) towards your first home. If you use the Lisa to buy a house, you can then keep the account and use it to save money for retirement. But savers making withdrawals for any other reason than buying their first home or saving for later life face a withdrawal charge of 25%. The Lisa is an ISA (Individual Savings Account), and you can only pay up to £20,000 into ISAs in the 2025-26 tax year. Therefore, if you put the maximum of £4,000 into your Lisa, you will only be able to put up to £16,000 into any other ISA accounts. Speaking to the House of Commons Treasury Committee earlier this year, he said: 'We have a succession of young people, who are saving in the vehicle they have been encouraged to save in by the state, who are then using, trying to use their savings to buy a first-time property. 'But, due to house price inflation, their property has just tripped above the £450,000 level. And then, not only do they not get the £1,000 a year bonus they were intended to get, they are fined by the state effectively 6.25% of their own money in order to withdraw that money to get the cash out. More Trending 'When I do television programmes on the Lifetime ISA, I have to warn people about that. 'And when I warn them about that, because you have to have the caveat 'that you should only save in this if you are definitely going to buy a property under £450,000', instantly we have a huge dropout in the number of people who get it. 'So, the sentiment that that does is very negative. Generally, in every other way, the Lifetime ISA is potentially superior [than the Help to Buy ISA], but not in that way. And that needs to change.' View More » Martin suggested the £450,000 limit should be increased to catch up with average property prices and index-linked to house prices, potentially on a regional basis due to wide price disparities across the UK. Get in touch with our news team by emailing us at webnews@ For more stories like this, check our news page. MORE: Couple who illegally built £1,000,000 home ordered to tear it down MORE: 'Unfairly maligned and underrated' town revealed as Britain's happiest place to live MORE: I swapped London renting for a £21,000 narrowboat — it's a life of extreme highs and lows
Yahoo
22-05-2025
- Business
- Yahoo
Average first-time buyers in London need almost £140,000 for a deposit
A small fortune separates what first-time buyers think they need for a deposit from reality. In London, this gap is almost £100,000. Nationally, the typical deposit for a first-time buyer stands at £56,700 based on an average property price of £259,700. However, would-be homeowners expect to save just £27,600 — less than half the actual amount required, figures from property site Zoopla show. In London, where property values are the highest in the country, the divide is particularly stark. First-time buyers believe they need a deposit of £39,800, yet the true figure is closer to £138,800 — a £99,000 disparity. Read more: Elizabeth Line drives rents up 31% in three years The South East follows a similar trend. Buyers in the region expect to put down £22,800 — a shortfall of £45,600. Northern Ireland stands out as the only part of the UK where perceptions actually exceed reality. Here, first-time buyers estimate a deposit of £42,000, compared to the actual average of £39,000. Daniel Copley, a consumer expert at Zoopla, said: 'Home ownership clearly plays an important role in the aspirations of UK adults. However, achieving this ambition is challenging due to the considerable affordability gap, with our data highlighting the significant disconnect between what first-time buyers believe they need to save for a deposit and the actual amount required. "This underscores that affordability is a central pillar in people's home-buying decision-making process. Aspiring homeowners should engage with a qualified mortgage broker early on. "They can provide essential guidance on deposit requirements, affordability thresholds and available financing options, ensuring buyers are well-informed as they embark on their property journey." Read more: More interest rate cuts in doubt after surprise inflation surge The affordability crisis is most acute in southern England, where homes in eight of ten towns are valued at more than four times average annual incomes. In contrast, the outlook is more optimistic in northern regions, where 43% of respondents said they believe homeownership is achievable within five years, compared with just 34% in the South. Despite a strong cultural emphasis on homeownership, financial pressure continues to dampen ambition. Nationwide, 73% of those surveyed said that the cost of buying a home in their region makes it harder to prioritise ownership. That figure rises to 77% in the West Midlands and 82% in London. Among millennials, only 9% believe they can realistically prioritise homeownership in their area. Meanwhile, some first-time buyers had more than £50,000 to put towards the cost of their property in 2022-23 after saving into Lifetime Isas, according to HM Revenue and Customs (HMRC) figures. Lifetime Isas, or Lisas, were launched to help people get a foot on the housing ladder or help them save for later life. Read more: Rachel Reeves rules out cutting ISA limit but remains vague on cash savings A freedom of information (FOI) request made to HMRC by money app Plum found that the top 25 Lisa withdrawals made to buy a home in the financial year 2022-23 averaged £51,000. People can save up to £4,000 per year into an Isa up to the age of 50, and the government will add a 25% bonus to savings, up to £1,000 per year. Savers making withdrawals for any other reason than buying their first home or saving for later life face a withdrawal charge of 25%. If someone is using a Lisa for their first home, the property must cost £450,000 or in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-05-2025
- Business
- Yahoo
Rachel Reeves U-turns on plan to cut ISA limit to £4,000
Rachel Reeves has confirmed she will not reduce the £20,000 annual limit for Individual Savings Accounts (ISAs) in a move set to benefit savers across the country. The chancellor had faced pressure from banks not press ahead with plans to cut the limit in a bid to kickstart growth, which is one of the government's key objectives. Earlier this year Emma Reynolds, the economic secretary, pointed out 'hundreds of billions of pounds in cash ISAs' were preventing money from being invested in the London Stock Exchange, fuelling speculation the annual limit could be cut. But Ms Reeves told the BBC: 'I'm not going to reduce the limit of what people can put into an ISA, but I do want people to get better returns on their savings, whether that's in a pension or in their day-to-day savings. 'And at the moment, a lot of money is put into cash or bonds when it could be invested in equities, in stock markets, and earn a better return for people. But I absolutely want to preserve that £20,000 tax-free investment that people can make every year.' Cash ISAs, which are held by 18m people and have a combined total of almost £50bn in them, allow households to save without paying income tax on the interest. But there are also Lifetime Isas (LISAs) for property, innovative finance ISAs and stocks and shares ISAs for investing - and it is the latter which Ms Reeves hopes to encourage more people to use. Any money saved, generated, earned or created within any ISA is tax-free. Over longer periods of time, investing in equities outperforms holding cash, as interest rates can remain low for prolonged periods of time, while stock markets have historically grown. However, shares, funds and other types of investing offers no guaranteed return and losing money is possible - while cash kept in bank accounts offers a fixed and familiar number and will not go down in number unless spent. Building societies have also pointed out how they utilise some of the money saved in cash ISAs to back the mortgages they hold, and removing a portion of that cash could limit how much they can lend in future. Changes to the cash ISA or the overall ISA model could still be forthcoming later this year. Simplification of the ecosystem has been pushed for over the years, including combining the cash and investing ISAs into a single product. 'One of the reasons why we're looking at advice and guidance that financial firms can give to their customers is to make sure that people are making informed decisions about how to invest their money, whether that's their pension savings or their ISA savings,' Ms Reeves added. Sign in to access your portfolio
Yahoo
13-05-2025
- Business
- Yahoo
Lifetime Isas: What they are and how they work
Lifetime Isas or 'Lisas' were first introduced in April 2017, as then-chancellor George Osborne's offering to help first-time buyers and future retirees grow a tax-free nest egg in one fell swoop. It was a clever move, offering help to both young people who needed help to get onto the housing ladder, and offering an alternative to a pension to those saving for the longer-term. Here, Telegraph Money explains how Lifetime Isas work, and what you need to know about the withdrawal penalty. What is a Lifetime Isa and who can open one? How does the Lifetime Isa bonus work? How does the withdrawal penalty work? How to use a Lifetime Isa to buy your first home Lifetime Isas vs pensions – which is better for retirement? Lifetime Isa FAQs A Lifetime Isa (Lisa) is a particular type of Isa (Individual Savings Account) available in the UK, specifically designed to help younger people save for one of two main goals: Buying their first home Saving for retirement Savers aged 18-39 are able to open a Lifetime Isa, where money can be held as cash or invested in stocks and shares. You can deposit up to £4,000 in each tax year – what you pay in will come out of your £20,000 Isa allowance – and the big incentive is the Government adds a 25pc bonus up to a maximum £1,000 a year. You can carry on saving money until you turn 50. Money can only be withdrawn either to buy your first home, or to use in retirement after the age of 60. Taking money out for any other reason (other than being diagnosed with a terminal illness) will trigger a withdrawal penalty, which not only removes the government bonus, but some of your own cash, too. Cash Lisas work in the same way as other cash Isas: you'll earn a variable rate of interest that remains tax-free while it's held within an Isa. If you're planning to save money held in a Lisa for a longer period of time – at least five years – an investment account might be more suitable and could see you make bigger returns (although this isn't guaranteed). Some investment Lisas, such those offered by Nutmeg and Moneybox, have the option to put your money into a ready-made portfolio. This means that the platform selects what you invest in, so you don't have to. Given there's more input from the provider, these accounts can come with more fees. Nutmeg fees, for example, are 0.75pc up to £100,000, with 0.35pc on anything over. Fully managed fund costs are 0.19pc, and there's a market spread fee of 0.04p. If you prefer a more DIY approach, providers such as AJ Bell and Hargreaves Lansdown give you the flexibility to choose for yourself. Our calculator below can give you an idea of how much you could save. Our guide to the best lifetime Isas can reveal the top rates, and further fee information. For each £1 you pay into a Lisa, you'll get 25p 'free' from the Government. That's in addition to any savings interest or investment growth. The government bonus is 25pc of what you pay in, up to £4,000 The bonus is tax-free You'll lose the bonus – and 6.25pc of your own money – if you make a withdrawal that qualifies for the penalty. If you make a withdrawal from a Lisa for a reason other than buying your first home, or to buy a home over the limit, when you're over 60, or if you have a terminal illness, then the withdrawal penalty will be applied. This is 25pc of the amount being withdrawn. This not only removes the 25pc government bonus, but also 6.25pc of your own money. The penalty was temporarily reduced to 20pc during the pandemic, when large numbers of savers sought to access their savings. This meant only the government bonus was deducted, and there were calls to keep the penalty as it was. However, the original penalty rules were reintroduced in April 2021. If you want to buy your first home, your Lisa savings can be used to go towards purchasing a residential property in Britain with a value up to £450,000. For two people purchasing their first property together, each person can hold their own Lisa, and pool the money from both accounts to buy the same property. When you're ready to buy, you'll need to ask your solicitor or conveyancer to contact your Lisa provider to request the money you require to buy your home. Your solicitor will usually ask you to fill out a form to give details of the Lisa's details, and specifying the amount you want to withdraw. If you're intending to withdraw the full amount, you may be required to close the Lisa afterwards. The full amount may also be pending interest your provider owes – your solicitor can confirm the final amount after it has been transferred. Some providers stipulate a certain timescale for sending the money to your solicitor, so you'll need to make sure you allow enough time for the funds to be sent, or it could delay your exchange or completion dates. However, don't go too early. The property purchase must complete within 90 days of the transfer taking place; if it falls through, the funds should be restored to your account, without any penalty being deducted. Your solicitor will detail the amount you've agreed to pay as a deposit for the property, as well as fees for their services, property searches and any other fees you have incurred. These should be detailed, along with the payments you have made and the money received from your Lisa provider. Check this over carefully, making sure your Lisa savings have been correctly set against what you owe. Note that you will not be considered a first-time buyer for the purposes of Lisa rules if you've inherited or partly owned a property in the past, even if the property is not in the UK. When considering Lifetime Isas for pensions, there are multiple things you need to consider: Investment limits Capital access Inheritance tax Opening the account When you pay tax The most that can be paid into your Lisa each year is £5,000, made up of £4,000 from you and £1,000 in government bonuses. At most, this amount can be paid in each year between the ages of 18 and 49, meaning up to £155,000 can be deposited in total. This is not including savings interest or investment growth, which will continue to accumulate while the account is open. While this is not an insignificant amount, it's nothing compared to what you could save with a pension – this savings vehicle could even see you become a pension millionaire. Pensions can grow over a much longer period of time. Accounts can be opened for children, and paid into even beyond retirement age. While you're still working, and before any withdrawals have been made, you can pay in up to £60,000 a year or up to 100pc of your annual salary – whichever is less. Your Lifetime Isa savings can be accessed any time after you turn 60, for whatever you like. You can make partial withdrawals, or withdraw it all – although it will fail to be tax-free if you then pay it into a different account. By contrast, you'll need to wait until you reach retirement age to access your pension savings, which is currently 66. Under pension freedom rules, you can access defined contribution pension savings at age 55 (increasing to 57 in April 2028). Lisa savings form part of your estate, and therefore come within the scope of inheritance tax. Pension savings haven't historically been considered part of someone's estate, but they are due to be brought within the scope of inheritance tax from April 2027. Given that the cost of retirement is on the rise, a Lisa can offer a way to save for when you're over the age of 60. It could be used as well as, or instead of a private pension, but there are some key differences to be aware of. Parents can open pensions for their children, and other people – such as grandparents – can pay into the account. Lisas, on the other hand, can only be opened by the saver, and they're also the only ones who can make deposits. For parents or grandparents wanting to help their younger relatives save for the future, they can only give money and assume it will be transferred into the account. The money you pay into a Lisa will have already been taxed (unless you're not a taxpayer). While money is held within the Lisa, any growth will be free from tax. This includes a cash Isa's savings interest, which could otherwise be liable for income tax, and a stocks and shares Isa's investment growth, which could otherwise trigger capital gains tax and dividend tax. Tax benefits for pension savings come when you pay in the money, thanks to pension tax relief. However, the funds become taxable when you come to draw down the money. A pension can be more lucrative, thanks to the tax relief paid on your contributions – this is based on the highest rate of income tax you pay, meaning basic-rate taxpayers get 20pc tax relief, and those who pay higher-rate tax get 40pc. It means contributing £100 to your pension only costs you £80 as a basic-rate taxpayer, but for a higher-rate earner it would only cost you £60 to contribute that amount. For a basic-rate taxpayer the 'free' money is the same in a Lisa or a pension. But once you become a higher or top-rate taxpayer, a pension will win out. Employees will benefit even more. Under auto-enrolment rules, employers must contribute at least 3pc to employees' pensions – many will pay in more, and match or even exceed your contribution. What's more, if you pay in via a salary sacrifice scheme, you'll also get National Insurance relief, in addition to income tax relief. You have to hold a Lisa for at least a year before you can withdraw the funds to use towards your first home, otherwise you'll pay the withdrawal penalty. If you're looking to buy a home sooner, a different type of savings account would likely suit you more – although you will miss out on the government bonus. As Isa providers have to submit savings information to HMRC each year, the taxman will find out if you exceed the deposit limit. If it thinks you paid in more by accident, it will usually get in touch to explain what you need to do to correct the error (by transferring the excess to a different account, for example), and the extra money will lose its tax-free status, so there might be tax to pay on any growth. If you have more than £4,000 to save, you can either save into a different type of Isa, or a non-Isa savings or investment account. Some providers will have automatic mechanisms in place to make sure you don't exceed the deposit limit. For example, Nutmeg says any money from direct debit payments exceeding £4,000 will be automatically sent to its 'Unallocated Cash' pot. It won't be invested, but instead held until you give further instructions. The Help to Buy scheme closed to new entrants on November 30 2019. You can keep saving into an account if you opened one before this date and it can be used in conjunction with a Lifetime Isa. You can continue to save into a Help to Buy Isa until November 30 2029; the final deadline for claiming a Help to Buy Isa bonus is December 1 2030. However, you won't be able to get the Help to Buy Isa bonus, a maximum of £3,000, if you save the full £12,000 and also use the Lifetime Isa. Overall, the Lifetime Isa is a better account for buying a home. Sign in to access your portfolio
