The coronavirus (COVID-19) crisis is causing devastating consequences across the world, with at least 171,000 of people having died from the virus. In order to try to slow the spread of COVID-19, the UK has been in lockdown for more than four weeks, and the outbreak has also had a financial impact on millions.
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While some may qualify for forms of financial support such as the Coronavirus Job Retention Scheme or claim Universal Credit, many will find themselves struggling during these unprecedented times.
Back in January, a nationwide study by homelessness charity, Beam.org revealed that the average British adult could only pay their rent or mortgage for two and a half months if they lost their jobs.
Meanwhile, only three in 10 (30 percent) have savings they could dip in to in order to pay for housing if their financial sitauation changed.
With many likely looking to supplement drops in income, some will perhaps look to draw on the savings that they may have.
However, for those who have put money into a Help to Buy ISA or a Lifetime ISA, it’s important to be aware of some rules surrounding withdrawals.
The two accounts both offer a 25 percent government bonus on savings up to certain limits, but they have different rules, and while its possible to have both accounts, the bonus payment is limited to one or the other.
Those with a Lifetime ISA can put in up to £4,000 (from the £20,000 annual ISA limit) into their account, until they reach the age of 50.
The government will then add a 25 percent bonus to these savings – up to £1,000 per year.
However, there are specific rules surrounding withdrawing money from the Lifetime ISA.
This can be done if the reason is because the saver is buying their first home, because they’re aged 60 or older, or terminally ill with less than 12 months to live.
Otherwise, a 25 percent withdrawal charge will apply on cash or assets withdrawn from the account for any other reason.
The Gov.uk website warns: “The withdrawal charge aims to recover the government bonus received and apply an extra charge to the original savings.
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“This means if you treat your Lifetime ISA as a short-term savings product, you could get back less than you paid in.”
It’s no longer possible to open a Help to Buy ISA, however it’s still possible for those with an account to continue saving in them.
In this account, the eligible saver can save up to £200 a month – as well as being able to kickstart the account in the first month, by depositing a lump sum of up to £1,200.
The minimum government bonus on these savings is £400 – meaning £1,600 must have been saved first in order to claim the bonus.
There’s also a maximum government bonus – which is £3,000. This means that £12,000 must have been saved to receive this.
This bonus is not applied straight away, but once it is certain the transaction will go ahead.
It is possible to withdraw money from the Help to Buy ISA at any time, however there is still details to be aware of.
Savers should note that they can’t put all the money they’ve withdrawn straight back into the account, should they wish to.
Instead, they’ll only be able to save up to £200 in every month.
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