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Personal protective equipment (PPE) zero-rated for VAT until July 2020
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Coronavirus: Tax tweaks help the vulnerable

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From LISAs to VAT zero rating, tax credits and statutory payments, the government is using every tool it can to help taxpayers hit by the coronavirus crisis. But is there anything more it could do?

14th May 2020
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Life time ISA

The life-time ISA (LISA) was introduced in April 2017 to encourage UK residents to save for long term goals such a buying a home or retirement. Individuals have to be aged between 18 and 40 to open a LISA, and the government pays in a 25% bonus of up to £1,000 per year on amounts contributed in the year until the saver reaches the age of 50.

The catch is there is a penalty of 25% of the amount withdrawn if the funds are taken out in circumstances other than:

  • to buy the saver’s first home worth up to £450,000
  • when the saver is aged 60 or more
  • when the saver is terminally ill with less than 12 months to live.

The withdrawal penalty has been set at 25% and at that rate it takes some of the saver’s initial capital if no interest has been added by the bank (see example).

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Replies (5)

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By johnjenkins
15th May 2020 10:58

Apart from replacing lost income, when you start tweeking and plastering gaps there will be gainers and losers. I think the Government have done a brilliant job under the circumstances. Hindsight will tell us, we should have done this earlier or stockpiled that. You could go on and on (which I usually do). Getting the balance right is difficult and there will always be "collateral damage". This is not a UK problem, it is a world problem and needs to be sorted before we get a virus that does wipe out the human race. Time for Governments to take stock and realise what is important for the future of humanity. This time we were able to tackle it, next time we might not have so much warning. So tinkering with pennies here and pennies there won't help.

Thanks (1)
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By Robin Wishart
15th May 2020 11:38

Has anything been done about the Holiday Letting rules?
Clearly, operators of Holiday lets are unlikely to have their properties let for the required number of days in the current circumstances.

Thanks (1)
Replying to Robin Wishart:
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By stellaboy
15th May 2020 12:04

Boo hoo

Thanks (2)
Replying to Robin Wishart:
Head of woman
By Rebecca Cave
26th May 2020 14:40

No, there has been no announcement for easing the FHL rules. Although the grace period already allows for one or two fallow years if conditions were met previously.

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By sammerchant
16th May 2020 09:59

I believe that there will be very many self-employed taxpayers, who having had a reasonable 2019/2020 will be faced not only with the balance of the tax for that year, but also a payment on account for 2020/2021 which, pending claims to reduce, will be unsustainable. It is also unlikely that these taxpayers will have set aside the monies needed to pay the 2019/2020 tax bill on 31 January 2021.

One solution, and simply as a one-off, would be for the Chancellor to permit all taxpayers to spread the payments for 2019/2020 a while longer. And, more drastically, to allow the self-employed a form of 'averaging' over the two years. I would hope that those who survive will be on an even keel by 2021/2022.

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