In essence, if they are a first-time buyer, they can save up to £200 a month towards their first home with a Help to Buy ISA and the government will boost their savings by 25% if the funds are used to buy property (up to a maximum bonus of £3,000). So, these accounts are worth continuing.
Lifetime ISAs can be used to buy a first home or save for later life. New customers must be 18 or over but under 40. A customer can pay in up to £4,000 each year, until they are 50. The government will add a 25% bonus to these savings – up to a maximum of £1,000 per year.
It’s worth noting that the Lifetime Isa limit of £4,000 does count towards the total Isa allowance for the tax year.
A customer can hold cash, or stocks and shares, in a Lifetime Isa or have a combination of both.
So, for students who are concerned about getting the most from their savings, for either purchasing a house or for retirement planning, the options are there. As an adviser you can take them through what’s available.
3. Pensions
Probably one of the last things on a young person’s mind when they have just left education is pension planning. However with automatic enrolment into workplace pensions, more and more people are getting involved in pensions at a younger age.
So long as they are 22, classed as a worker, ordinarily work in the UK and earn over £10,000 a year, they will automatically be enrolled.
They will also usually receive an employer contribution, which can effectively double their contribution. They can opt out, so it is extremely important to encourage them to stay enrolled.
For those who choose to be self-employed, there is nothing automatically available. There is a real opportunity to offer advice and encourage them to start saving in a pension now. As an adviser, you will be well versed in the tax advantages of utilising pensions, and the sooner they start the better.
These are just a few of the areas advisers can help with. You can make a really positive difference to the long-term financial health, not only of your clients, but also their whole family.
John Somerville is relationship director, corporate and professional Learning at The London Institute of Banking & Finance
