Metfriendly's Lifetime ISA

Helping people aged 18-39 buy their first home or build an additional retirement nest egg

The Metfriendly Lifetime ISA (LISA) is designed to do one of two things – help you buy your first home, or supplement your retirement pot.

You can save up to £4,000 a year tax-free to which the government will add an impressive 25% (that’s up to £1,000 p.a.!) and Metfriendly also adds annual bonuses and a final bonus. 

It’s important to remember however, that although the government bonus is added as you save, you will only actually keep it if you are a first time home buyer and use your LISA savings on a ‘qualifying property purchase’ (see FAQs) or don’t withdraw any of your savings until you are 60.

 Lifetime ISA Key Benefits

  • the government will add 25% on top of your savings – that’s up to £1,000 each year!
  • Metfriendly will add an additional guaranteed annual bonus (2% until April 2018). After that, annual bonuses are as per our Lump Sum ISA, including a possible final bonus after you invest for a further 3 complete tax years
  • save monthly (min £100 p.m.) or add lump sums (min £1,200 or £400 for top-ups)
  • you can invest a maximum of £4,000 per year (leaving you £16,000 a year to invest in other Metfriendly ISAs) 
  • available to those aged 18-39, but once you’ve opened an account you’ll be able to continue to pay in contributions up to the age of 50
  • no income or capital gains tax is payable on the investment growth
  • your spouse is eligible too which means you could get up to £2,000 a year EXTRA from the government between you
  • you can transfer money in from other ISAs too (see FAQs)

Please note, if you seek to withdraw funds from a Lifetime ISA for anything other than a qualifying house purchase (or before the age of 60, if you’re saving towards retirement) significant government penalties apply, and you may get less back than you have put in.

What returns might I expect from this plan?

The 2% annual bonus rate applies only for amounts invested in 2017/18. The annual bonus rate (and final bonus rate) applying to amounts remaining invested after the guarantee period will be the same as the bonus rates for our Lump Sum ISA which you can view here.

You can also see the past performance of our Lump Sum ISA here.

What happens if I cash-in my Lifetime ISA early (within 3 years)?

Firstly, remember that if you surrender your LISA before your 60th birthday and DO NOT use the funds for a qualifying property purchase, there will be a 25% HMRC charge on the amount surrendered. This will not only claim back the government bonus but will also apply a penalty to the remaining amount.

In addition, Metfriendly may make the following charge:

Withdrawal in the same tax year as the investment

Our charge will be 5%, or 2% if used for a qualifying property purchase.

Withdrawal in the tax year following investment 

Our charge will be 3%, but waived if used for a qualifying property purchase.

Withdrawal in later tax years

There will be no charges by Metfriendly.

What is a 'qualifying property purchase'?

To avoid the 25% government charge on your LISA withdrawals they must be used for a ‘qualifying property purchase‘.

The main conditions are:

  • that you have never owned a property before
  • the value of the property (which must be in UK) can only be up to £450,000
  • you must not be buying under a shared-ownership scheme
  • it must be for the first-time-buyer to live in as their only residence and not buy-to-let
  • the conveyancing must be carried out by an eligible conveyancer

  • the withdrawal of funds for the purchase must be at least 12 months after the first subscription to each lifetime ISA, including funds transferred from a Help to Buy ISA

NB. You may buy a property jointly with a partner, however they will only be able to use LISA savings if it is also their first house purchase. 

Where is my premium invested?

graph

Your money is invested in a balanced mixture of equities, bonds, cash and property by the investment experts at Metfriendly. So you have the potential for a higher level of return than cash, but with lower risk than investing entirely in stocks and shares.

The example in the diagram shows the approximate “mix” as at 31 December 2016. For more information on how the with-profits fund works, please refer to How we manage the with-profits fund.

What are the rules on ISA transfers into my Lifetime ISA?

In general, you can transfer money from different types of ISAs to your Lifetime ISA, however the rules vary depending on the type.

Other ISAs

You can transfer any amount up to £4,000 from any other “Cash” or “Stocks and Shares” or “Innovative Finance” ISA into a LISA. Any amount transferred will count against the LISA limit and will receive the Government bonus. Current year subscriptions transferred-in will continue to count against the overall annual ISA limit, but previous year subscriptions will not.

Only £4,000 can be transferred (or lesser amount if you have already made current year contributions into the LISA) and will attract the full Government bonus unless the transfer is from another LISA. Therefore if you want to transfer more than £4000 from another ISA and receive the government bonus on the full amount, it would be necessary to transfer the extra amount(s) in subsequent tax year(s) until you have transferred the total value.

Other Lifetime ISAs

You can transfer any amount without upper limit between LISAs. In respect of current year contributions, the Government bonus will be applied either by the original LISA manager or by the new one (not both!). The amount of your current year LISA contributions continues to apply against your LISA limit and your overall ISA limit.

Help To Buy ISAs

You can transfer up to £4,000 from a ‘Help to Buy’ Cash ISA into a LISA. But during the 2017/18 tax year only, investors who are eligible to open a Lifetime ISA may make a single one-off transfer of any funds (including interest) up to the value built up in the Help to Buy ISA as at 5 April 2017 into a Lifetime ISA without this amount counting towards the Lifetime ISA payment limit, and with the government bonus applying to the full amount transferred – even if this is over £4,000.

Table showing treatment of different types of subscriptions and payments into a Lifetime ISA (LISA)

The table below sets out all the rules, but should you have any questions about transferring don’t hesitate to call our office on 01689 891454.

Type of subscription / payment / transfer
Does it count towards annual ISA subscription limit if paid to LISA? Does it count towards LISA payment limit (is it a current year payment)? Can it earn a Government bonus (is it a qualifying addition)? Is payment disregarded for the ‘one LISA per tax year’ rule?
Transfer of previous year ISA cash or investments from non-LISA No Yes Yes No
Transfer of current year ISA cash or investments from non-LISA Yes (when initially subscribed to non-LISA) Yes (on transfer) Yes No
Funds transferred to LISA from Help to Buy ISA during 2017/18 No No (but only up to value held in Help to Buy ISA at 5 April 2017) Yes No
What if I change my mind?

When you open a LISA account with us we will send you a certificate showing your benefits and a cancellation notice. If you change your mind, you can return the notice within 30 days for a full refund.

Please note however, there are special cancellation rights in 2017/18 only. Any withdrawal (except for Terminal Illness or death) would trigger a complete cancellation with no entitlement to any government bonus, and although there would be no HMRC charge, there would be a Metfriendly charge.

How much will it cost for advice?
  • We do not offer or give financial advice.
  • We do not make any form of commission or incentive payments.
  • The cost of providing verbal or written information about this product is included in our overall expenses.

‘Hassle-free savings that are started every year on my behalf, without me having to call up.’

 

D.C. R McLaren, Hackney Borough Stations

Great opportunity for family members to be offered the same offers as members.

Miss A McLeary, ESB

Very happy with the service. I have a number of policies for myself and my children.

Police Sergeant S Drysdale, DPS Borough Support

‘I have always been pleased with the returns from my Metfriendly policies.’

Mr P Payne, Bordon

‘I would recommend Metfriendly to everyone.’

Mrs V Thompson, Dagenham

‘I’ve used Metfriendly for the last 5 years and recently the money has gone towards a deposit for our house. I will be signing back up next year to help save towards my kids future.’

Mrs A Cooper, Met CC, Bow

‘I have been a member since 1980. Never had any problems or issues. Staff always helpful.’

Mr Nino Trancucci, London

‘Very pleased with the service I’ve received to help me save money direct from my salary.’

DC Chris W, SO15

Good service – always very helpful and informative.

Miss J Coward, South Norwood, London

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