Chancellor George Osborne has announced plans in his pre-Election budget for a large-scale revamp of ISAs – including the introduction of increased flexibility and plans to help first-time home buyers in their attempts to climb upon the property ladder.
Osborne’s announcement to Parliament outlined the possibility of making withdrawals from an ISA without losing the tax-free subscription allowance in that tax year, as well as a ‘help to buy’ ISA, aimed at those saving for a deposit for their first home, into which the government will top up savers’ contributions. The government will also extend the range of ISA-eligible investments.
Speaking after Wednesday’s Budget, Alan Clifton, Partner at The Financial Planning Group in Teddington, said; “The news of a fully flexible ISA is great news for savers and the potential of a ‘help to buy’ ISA is a very interesting concept that we look forward to hearing more details about from the Chancellor and to see how such a scheme would work in practice.”
Initial details suggest that for every £200 contributed into a ‘help to buy ISA’, the government will contribute £50. The bonus is being offered for each person, not each house, so a couple will be able to get up to £6,000 towards their purchase. The payment will be made towards a first home – it cannot be used to fund a buy-to-let property, even if the buyer does not own another home. The cost of the homes that the account can be used to buy is capped at £450,000 in London and £250,000 everywhere else in the UK.
As ever, it is important to consider all aspects of the budget and it’s vital to seek advice from a qualified Chartered Financial Adviser when establishing how to best structure your medium-long-term investment plans, or an independent mortgage advisor with access to the broadest range of deal across all lenders.
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