Tel: 01403 780 770

Building and protecting your wealth

TAX TIP TUESDAY: Which is best for tax relief, Lifetime ISA or pension?

Want to save tax this year? Read this week’s short Tax Tip, tailored for UK doctors and dentists to help you save money and get more organised with your tax affairs. Take 5 minutes to have a read.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 

The new Lifetime ISA

The new Lifetime ISA, dubbed LISA, was launched in April 2017 as a means for young people to save for their first home and their retirement simultaneously. Aimed to help somewhat to tackle a couple of real issues in the UK with home ownership and a lack of retirement planning.

Key points on the ISA:

  • Available to open for everyone between age 18 and 40
  • You can contribute up to £4,000 per year
  • The government contribute 25% tax-free bonus, up to £1,000 per year
  • Interest or investment growth will also accumulate on both your contribution and the bonus
  • The bonus is available on contributions up to the age of 50
  • Funds can be used to pay for a deposit on a first property, or taken for any use after age 60

Tax breaks of Lifetime ISA versus pensions

Unlike pensions, your employer will not be able to contribute to your retirement plan.

Also, unlike pensions you will not receive tax relief on the contributions you make.

However, you will not pay tax when drawing money from your LISA for retirement. This is different to pensions, where tax is payable at your rate of tax; i.e. basic, higher or top rate, after a 25% tax-free lump sum.

If you are a higher-rate tax payer then pensions still hold more tax benefits as you will receive a 40% tax relief on your pension continuations, which is double what you would receive if contributing to a LISA.

However, some higher rate tax payers are still using a LISA as an alternative product to diversity their portfolio.

Basic rate tax payers need to carefully plan their savings, investments and pensions according to their long-term financial goals.

Follow us on Twitter and LinkedIn for regular financial and mortgage updates

Twitter          LinkedIn

If you found this article interesting, why not share it?

Meet the Advisers

With over 20 years experience our advisors can help you meet your business and personal goals.

Who we Help

All our clients are doctors and dentists, just like you. As specialists we know your industry inside out.

Info & News

Make this the place you visit to keep up to speed with financial news for your sector.

Contact Us

Wherever you are in the UK we can help you build and protect your wealth.

Get Connected

to our specialist team

Tel: 01403 780 770

Keep Updated

Simply register your name and email below and receive our updates direct to your inbox

Dental & Medical Financial Services News Updates

Just for doctors and dentists

Read more news


Dental and Medical Financial Services is an appointed representative of Best Practice IFA Group Limited, which is authorised and regulated by the Financial Conduct Authority. Company registered in England no. 9158580 Registered office: 1 Market Square, Horsham, West Sussex, RH12 1EU

© 2014 Dental & medical Financial Services. All rights reserved. Website design by Goldmine Media.