First Home Coach

The Lifetime ISA is a type of Individual Savings Account which has been designed to encourage those under 40 to save for a first home or for retirement. To encourage saving the government will give you an extra £1 bonus for every £4 you pay put in.

You can withdraw to help pay for your first home under £450,000 or tax-free from age 60.

Our Stocks & Shares Lifetime Individual Savings Account (Lifetime ISA) provides you with an easy to access, tax-efficient way of saving/investing your money to take advantage of this bonus.

A Lifetime ISA should not be used as a general savings vehicle, as most withdrawals would result in the loss of the government bonus and a penalty.

A Lifetime ISA may be suitable for:

Saving towards your first property

If you are saving towards your first home, the full value of the Lifetime ISA can be withdrawn at any time at least 12 months after the first contribution has been received into the Lifetime ISA.

In addition, if the home is being bought with another first time buyer they can also invest in a Lifetime ISA to benefit from the Government bonus.

Note: You should bear in mind that over the mid to long term (5-10 years and over), inflation is likely to erode the purchasing power of your investment.

Saving for retirement

If you wish to save for your retirement you can contribute into a Lifetime ISA up until age 49. You can then withdraw some or all of the funds from the Lifetime ISA without incurring a penalty from your 60th birthday.

Note: If you wish to use a Lifetime ISA to invest for your retirement you should first ensure that your employer subscribes the maximum contributions to your workplace pension. If you are unsure about your pension provisions you should speak to your employer or seek advice from a financial adviser.

Warning: if you save in a Lifetime ISA instead of enrolling in, or contributing to, a qualifying scheme, occupational pension scheme or personal pension scheme:

• you may lose the benefit of contributions by an employer (if any) to that scheme; and
• your current and future entitlement to means tested benefits (if any) may be affected.

The eligibility rules to open a Lifetime ISA require that:

• you are aged between 18 and 39, and
• you are resident in the UK, or a Crown employee (or their spouse/civil partner) working overseas.
• You cannot hold a Lifetime ISA with, or on behalf of, someone else.
• You can contribute to your Lifetime ISA until age 50.

The most that can be paid into a Lifetime ISA for the current tax year is £4,000 and this forms part of the overall ISA contribution limit of £20,000 for the current tax year.

You can split your ISA allowance for a tax year across the different types of ISA, but you can only have open one of each type in the tax year.

For example, you could:

• Invest £4,000 in a Lifetime ISA;
• Invest £6,000 in a Cash ISA; and
• Invest £10,000 in a Stocks and Shares ISA

Your Lifetime ISA does not close when the tax year ends, you can choose to continue investing in that one or open another. Either way your savings will retain their tax-free basis for as long as you keep them within your Lifetime ISA.

Once a Lifetime ISA is open, you can invest up to the annual contribution limit (currently £4,000) into it each year until your 50th birthday.

Contributions can be made in a number of ways;

• regular monthly payments by direct debit, contributions can be stopped or changed at any time without penalty
• payments by cheque - made payable to ‘Unity Mutual’ with your name and ISA number on the back
• payments by direct money transfer – ensuring your ISA number is quoted in the transfer
• through the website
• by calling the office on 0161 214 4650

In choosing to invest in a Lifetime ISA you should consider your lifetime ISA subscription level and choice of qualifying investment in relation to your savings objectives, your expected investment horizon and your financial circumstances as a whole, including other provision for retirement.

You should also note that these factors may change over time and that you should regularly review your Lifetime ISA subscription and/or qualifying investments.

All investment growth generated by Lifetime ISA investments is exempt from income tax and capital gains tax for UK residents. The proceeds of the Lifetime ISA will be tax free as long as you are resident in the UK.

Tax rules and legislation relating to the Lifetime ISA may change in the future. The information given here is based on our understanding of the current situation at the date of publication. If you have any queries or concerns about your personal tax position we recommend you consult your local tax office or an IFA.

Lifetime ISAs can be transferred between ISA managers and any transfer must be done within 30 days after the receipt of the transfer request.

To transfer a Lifetime ISA you hold with another organisation to Unity Mutual you need to complete our Transfer Authority Form.

When we receive your application form we will contact the other provider once any cancellation period has expired.

To transfer a Lifetime ISA from Unity Mutual to another provider, you should contact them to make arrangements. Once they contact us with the necessary paperwork we will transfer your funds to them.

If, when funds are transferred, there are outstanding government bonuses, it is up to the new ISA manager to claim the bonuses due on the transferred funds from HMRC.

Transferring to a Lifetime ISA from different types of ISA

If the funds transferred to a Lifetime ISA are from a different type of ISA, the value transferred to the Lifetime ISA will count against the Lifetime ISA contribution limit but not the overall ISA limit for the tax year.

Partial transfers of ISA contributions from previous years are permitted. However, for transfers containing contributions in the same tax year, the contributions must be transferred in full up to the Lifetime ISA limit of £4000.

Transfers from a Help to Buy ISA

A Help to Buy ISA is a government scheme that was also designed to help you save for a mortgage deposit to buy a home which had similar, but more restrictive, characteristics than a Lifetime ISA.

If you transfer from a Help to Buy ISA to a Lifetime ISA the transfer will count towards the Lifetime ISA contribution limit for that tax year. Funds transferred from your Help to Buy ISA will be eligible for the government bonus.

Note: if you do transfer your Help to Buy: ISA, you will have to wait 12 months after you make your first contribution to the Lifetime ISA to withdraw the funds for a house purchase.

The Government bonus will be received each month after a contribution has been received.

Interest is earned on a daily basis.

Interest rates are set in March each year for the next tax year. The reasons for changing the interest rate could be:

• To enable us to respond to changes in the return on the underlying investments, either in relation to the past or expected future returns;
• Changes in the economic environment, including market volatility in bond, equity and property markets;
• To enable us to respond to actual or reasonably expected changes to the cost of running our business;
• To protect the financial strength of Unity Mutual, in the interest of all our customers; or;
• To reflect, where appropriate, changes in market rates on other financial services products.

This list is not exhaustive, and is only intended to give an example of the type of reasons that might result in changes.

Where interest rates are changed we will give you notice as follows:

• Where we reduce an interest rate and the balance of your account is £100 or more, we will give you at least 14 days’ prior written notice;
• If we increase an interest rate we will notify you via our website as soon as possible following the increase.

Authorised withdrawals

Withdrawals for the purchase of your first home or for retirement are known as authorised withdrawals, they are not penalised, but can only be made 12 months after the first contribution has been received.

You can make an authorised withdrawal for a house purchase if:

• the value of the house being purchased with a mortgage is less than £450,000;
• it is your first property — if you have previously owned all or part of any property the withdrawal will not be authorised and will incur a penalty; and
• the property is in the UK

In order to make an authorised withdrawal for retirement you must be aged 60 or over.

You may also withdraw from your Lifetime ISA if you are terminally ill.

Unauthorised withdrawals

As the Government wants to encourage saving, if you need to make a withdrawal for any other reason from a Lifetime ISA, a withdrawal penalty will be imposed.

A withdrawal penalty of 25% of the withdrawal amount will be made for all unauthorised withdrawals.

You should understand that:

• the lifetime ISA government withdrawal charge recovers any lifetime ISA government bonus and any investment growth on that bonus plus an additional amount; and
• if the lifetime ISA government withdrawal charge is incurred, the retail client could receive back less than they paid in.

Unity Mutual does not set the charge, and does not benefit from it, it is returned to the government.

For example: If you invest £4,000 and then received the government bonus of £1,000, the value of your Lifetime ISA will be £5,000. If you then withdraw the whole £5,000, a government charge of £1,250 (25%) will be taken, meaning you will only receive £3,750.

The money is invested by Unity Mutual in a mixture of investments such that we are able to provide you with a guaranteed return over each tax year.

The guaranteed return can vary, and will be informed to you in advance of each tax year.

The underlying investments used by Unity Mutual will change at our discretion and can include cash, government bonds, corporate bonds, equities, property and other assets that we might deem appropriate from time to time.

We will issue a statement annually which will show the value of your Lifetime ISA.

You can view your policy value by visiting our website in a few simple steps, or contacting our friendly team on 0161 214 4650.

In order to withdraw funds from your Lifetime ISA without a penalty for a house purchase:

• your Lifetime ISA must have been open for 12 months;
• you must be a first time buyer of a residential property with a purchase price of not more than £450,000;
• the property purchase must be funded by a mortgage (or equivalent) not cash; and;
• you must occupy the property as your only or main residence (unless you are unable to do so because you are an overseas crown servant, the spouse of an overseas crown servant, or you are waiting for the property to be built)

In order to withdraw the funds you will need to tell your conveyancer you wish to use part or all of your Lifetime ISA and you will have to provide them with a declaration.

Your conveyancer will then need to provide us with the relevant declarations. Once this has been received, we will pay the amount requested directly to the conveyancer within 30 days.

If the purchase of your property does not complete the conveyancer will return the monies to us and we will reinvest them on your behalf.

You can each use Lifetime ISA savings to buy your first home, provided you both meet the eligibility criteria.

If only one of you meets the eligibility criteria, for example, if one of you already owns a property, then only the person who meets the criteria can use their Lifetime ISA funds.

Your Lifetime ISA ceases on the date of your death. Any bonus due will be claimed and the amount that can be claimed will be calculated at 101% of the value of the fund held within the Lifetime ISA.

There is no government charge on death and, there will be no Income Tax or Capital Gains tax to be paid to that date, but the value of your ISA will form part of your estate for the purposes of Inheritance Tax.