Call to tweak Lifetime ISA for one-man bands

A savings vehicle that George Osborne trumpeted for one-man bands must be engineered slightly differently if it is to succeed in helping people who work for themselves.

Sounding this call since the Queen’s speech, contractor body IPSE said the chancellor’s promised Lifetime ISA should be extended to allow for a larger maximum annual payment.

Before it is introduced in April 2017, the LISA should also be made available for people closer to retirement, rather than just those under the proposed age of 40.

IPSE said: “It should be possible for the self-employed to withdraw a maximum amount without losing their bonus or interest so they have security as their income fluctuates.”

Once the LISA is available, advice about it for one-man bands should be “well sign posted,” urged IPSE’s policy and external affairs assistant Adam Waters.

He believes the tweaks to the new ISA are necessary in light of the Queen’s speech omitting any plan to bring the self-employed within the National Employment Savings Trust.

Meanwhile, initial calculations suggest that, in theory, LISA holders could pocket up to £32,000 from the government, assuming the maximum £128,000 is paid in over 32 years.

Introducing the LISA in March at Budget 2016, Mr Osborne said: “For the self-employed, it’s the kind of support they simply cannot get from the pensions system today.”