As of November 30, it is no longer possible to open a new Help To Buy ISA, which was introduced by the Government in 2015 to assist individuals to save to purchase a property.

Nationwide Building Society reported 300,000 applications in the final week, and 40% of their total number of HTB ISAs were sold in this seven-day period. Halifax says the number of applications in the final week was seven times greater than in an average week.

Contributions to existing HTB ISAs can be made until November 2029, and account holders can claim the Government bonus until the end of 2030.

Consumers wishing to take out a tax-efficient savings vehicle to help them get on the housing ladder may still be able to do so via a Lifetime ISA (LISA). Like HTB ISAs, LISAs also provide a 25% bonus from the Government, so if the account holder paid in the maximum of £4,000 in any one tax year, the bonus would be £1,000.

LISAs can be opened by anyone aged between 18 and 39, and contributions can continue to age 50. This means that if a customer makes the maximum contribution each year from age 18 to age 50 then the total Government bonus would be £33,000. The basic idea is that funds held in LISAs can be used either to assist with the purchase a home, or to save for retirement, although saving for retirement via a workplace pension is likely to be more advantageous. If funds are withdrawn for any other reason – retirement withdrawals are not permitted until age 60 – then a penalty of 6.25% of the contributions is payable.

Other features of the LISA tax wrapper include:

  • The funds cannot be used for the purchase of a home if the purchase price is greater than £450,000
  • They can invest in both cash and stocks & shares
  • Even if the individual uses their full cash ISA allowance, they can still contribute £4,000 to a LISA in the same tax year
  • They can be transferred to another provider

Nationwide’s director of savings Tom Riley said:

“We’ve seen unprecedented demand from potential first-time buyers looking to open a Help to Buy ISA before the 30 November deadline.

“While many are ready to start their journey to home ownership now by putting money aside on a regular basis, others are forward planning and opening the account ready for when they are in a position to start saving, knowing they have a decade to raise a deposit and claim the Government bonus. It’s a fantastic product and it is really encouraging to see people getting into the true spirit of saving at a time when home ownership remains a distant dream for many.”

 

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article