How can I pay into my Nutmeg Lifetime ISA?
You can make multiple one-off contributions to your Lifetime ISA by debit card. Once your LISA is set up you can also pay in regularly by Direct Debit.
How much do I need to contribute to start a Nutmeg Lifetime ISA?
You can start your Nutmeg Lifetime ISA with as little as £100.
If you’re approaching your 40th birthday, you may want to open your Nutmeg Lifetime ISA as soon as possible.
If you don’t open it before you turn 40 you won’t be able to open an account as Lifetime ISAs are only available to people aged between 18 and 39. Once opened, even with the minimum amount, you can sit back and relax. As of tax year 2019/20, you can contribute up to £4,000 per tax year to your Lifetime ISA until the day before you turn 50.
When does Nutmeg invest my government bonus?
We automatically invest your bonus in the same way as your contributions, rather than holding it in cash. This way, your contribution and the government bonus has longer to potentially benefit from compounding.
Our job is to help customers get the most from their investments. We want to support you in reaching your life goals, be they a first home, retirement or something you haven’t quite decided on.
What will I pay if I withdraw from a Nutmeg Lifetime ISA early?
If you decide to take the money out of your Lifetime ISA without adhering to the restrictions, there’s a price to pay. You’re looking at a withdrawal charge – by HMRC rather than Nutmeg – of 25% on the total amount withdrawn. Not only will you lose some of your investments, you’ll effectively get back less than you put in.
Here’s an example:
If we count the 25% government bonus on a contribution of £1,000, you’d have a total of £1,250 to take out. This means the 25% penalty charge amounts to £312.50, meaning you’d only get £937.50 of the £1,000 you put in initially. Hence, less than you put in.
Should I get a Nutmeg Lifetime ISA or pension?
As a rule of thumb, if you’re employed, continue to pay into your workplace pension and reap the benefits of any employer-matched contributions. These contributions, plus tax relief, will likely outweigh the 25% government bonus on Lifetime ISA contributions.
If you’ve maxed out contributions to your workplace pension, the Lifetime ISA could be a good option. You have to pay tax if contributions to your pension pots exceed £40,000 in a tax year, or £1,055,000 in total (these sums are correct as of the tax year 2019-20).
If you need to access your money before you’re 60, you may be better off with a pension because you can access your money once you’re 55 (likely to increase to 57 by 2028). With a Lifetime ISA, unless you’re buying your first home or you are terminally ill, you pay a penalty to withdraw your money before you are 60.
Unsure of what you’re investing for? The Lifetime ISA offers more flexibility than a pension: you can use it to save towards buying your first home, retirement, or both, whereas a pension is only for retirement.
If you’re still unsure whether a Lifetime ISA is right for you, we’ve created a simple tool to help you decide. This is not advice, and some of the Lifetime ISA rules are quite complicated, so please make sure you do your homework first.