People are calling out for a reform of the UK Government savings account
The Chancellor was asked about changes to Lifetime ISA rules ahead of the Autumn Budget(Image: Getty)
The UK Government has responded to calls to change its rules on the Lifetime ISA savings account.
Anyone aged between 18 and 39 can open a Lifetime ISA (LISA) to help save towards their first home or retirement.
You can pay in up to £4,000 each year until you are 50, and the government will add a 25 per cent bonus to your savings, up to a maximum of £1,000 per year.
Withdrawing money before you turn 60 means you are subject to a 25 per cent charge, unless you are using the money to buy your first home or are terminally ill.
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In the daily report published by the House of Commons on November 10, the Chancellor of the Exchequer was asked about changes to LISA rules.
It comes ahead of the Autumn Budget, where Rachel Reeves will deliver her plans for the country’s finances in just two weeks time.
Andrew Rosindell asked the Chancellor if she will take steps to increase the age cap on the opening of Lifetime ISAs, and if she will take steps to increase the Government contribution to savings in Lifetime ISAs.
Economic Secretary to the Treasury, Lucy Rigby MP KC(Image: Laurie Noble/UK Parliament/PA Wire N)
Lucy Rigby, Economic Secretary to the Treasury, responded: “On the Government LISA contribution, LISA holders can receive a generous 25 percent government bonus on contributions up to £4,000 per year.
“This means an individual who made the full contribution would receive a £1,000 bonus from the Government.
“On the age limits, the LISA is designed to encourage younger people to get into the habit of saving for the longer-term.
“Individuals who did not open a LISA before the age of 40 are still able to save in another ISA type and benefit from the annual subscription limit of £20,000.
“They can also contribute to a pension, where their contributions will generally receive significant tax relief from the Government.”
Lucy continued: “Those who opened a LISA before their 40th birthday can continue to subscribe until they are 50 and can continue managing their account beyond that date.
“This includes transferring the account to another LISA manager and changing their investment profile from cash to stocks and shares or vice versa.
“The Government keeps all aspects of savings tax policy under review, and considers all representations made carefully, with any changes made as part of the Budget process.”
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