AJ Bell is the latest mainstream broker to introduce a stocks and shares lifetime individual savings account (Lisa), the new savings scheme launched by the government last year. Savers aged between 18 and 40 can open a Lisa and contribute up to £4,000 per year up to the age of 50, with the government adding in £1 for every £4 contributed, up to a maximum bonus of £1,000 per year. Savers can then withdraw the money in order to pay for a first house or for retirement, but cannot access the money forany other reason (other than serious illness). AJ Bell is only the fourth investment platform to launch a Lisa, after Hargreaves Lansdown, Nutmeg and The Share Centre.
The platform charge for AJ Bell's new Lisa, of 0.25% on investments up to £100,000, will put it at the cheaper end of the market. Online investment manager Nutmeg and consumer favourite Hargreaves Lansdown both charge platform fees of 0.45%, while The Share Centre doesn't charge a platform fee at all. However, the stocks and shares Lisa that will provide the best value for investors will depend on the kind of investments they are looking to hold within the wrapper. For instance, The Share Centre's stocks and shares Lisa only offers three funds for investors, depending on their desired level of risk. Charges for these funds range from 1.92% to 2.01%, meaning that its platform will probably end up costing investors more in the long run.
Tax tip of the week
The government's Rent-a-Room scheme allows you to earn up to £7,500 per year tax-free by letting out furnished accommodation in your home. You can rent out as much of your house as you want, although the tax-free income allowance is halved if you share the income with someone else (ie, you can't double it to £15,000 by splitting it between a couple). If you earn up to £7,500, the tax exemption is automatic. If you earn more than that, then you can claim your allowance via your tax return. You're eligible for the scheme if you're an owner-occupier or a tenant (if your lease allows for this), or if you run a bed and breakfast or guesthouse. Note that you can't use the scheme for houses that have been converted into separate flats.
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