Savers say goodbye to £34m in LISA bonuses
During the 2020/21 tax year, HMRC reclaimed £34m in Lifetime ISA (LISA) withdrawal charges1. Although the government reduced withdrawal charges for LISAs from 25% to 20% in 2020 (to 5 April 2021) to help those who had no choice but to access their savings during the pandemic, this figure represents a threefold increase on the previous tax year (2019/20). No doubt the decision to access these savings earmarked for home purchases and retirement, was likely to have been a difficult decision for many, knowing they would be penalised on withdrawal. There have been calls on the government to reassess the withdrawal charge. We will keep you posted with any developments.
Making ends meet in retirement
Research2 has found that over a third of retirees (37%) don’t think they will have enough money to last their full retirement. Nearly half of those surveyed (48%) said they plan to reduce their spending habits to support themselves in retirement, while nearly one in three (27%) expect to continue to work part time and a fifth (21%) plan to sell their property or downsize. With longevity increasing and retirement consequently lasting many more years, the need to take advice to draw up a robust financial plan has never been so important.
1FoI request, 2022
2abrdn, Sep 2021
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
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