Key features of the Ready-made Lifetime ISA - The ...
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May 2020 key features of the Ready-made Lifetime ISA
2
account key features
The Financial Conduct Authority is a
Its Aims
financial services regulator. It requires The Share Centre‘s Ready-made Lifetime ISA aims to:
us, The Share Centre, to give you
this important information to help • Give you, as an 18-39 year old, the opportunity to
you decide whether our Lifetime invest a sum of money towards your first house
ISA account is right for you. You should purchase and/or saving for retirement.
read this document carefully so that you • Enable you to invest in one of, or a combination
understand what you are buying and of, the ES Share Centre Multi Manager; Income,
then keep it safe for future reference. Growth and Income, and Growth funds.
• Enable you to hold your investment(s) (subject to
Please also read our Terms of Business, Tariff, requirements) in a tax efficient Lifetime ISA.
and the Key Investor Information Document
for your chosen fund(s). As these will detail the
specific aims, risks and charges associated with Your Commitment
that investment. • Our Lifetime ISA does not have a minimum
The information supplied in this document is as initial investment amount, although you need
accurate and current as we can make it. If you have to be aware that the fixed costs of investing
any queries or need any additional information, can have a negative effect on relatively small
please call us on 01296 41 41 41. investment amounts.
If you are in any doubt about your investment • There is no minimum length of investment, but
decisions, please speak to an independent please remember that most investments linked
financial adviser, since The Share Centre provides to the stock market are designed for the medium
an Execution-only dealing service without any to long term and are not suitable for money
investment advice. which you might need at short notice.
‘FTSE®’ is a registered trademark of the London • You agree to pay into your Lifetime ISA before you
Stock Exchange plc and the Financial Times Limited, reach age 40.
and is used by the FTSE under licence. • No more than the current permitted annual
allowance of £4,000 may be paid into a
Lifetime ISA. You need to consider your level
of subscription and choice of investment in
relation to your savings objective, your expected
timescales for saving and your circumstances as
a whole, including other provisions for retirement.3
• You recognise that your circumstances could been reduced by the government to 20% as
change and the need to regularly review your a response to the coronavirus pandemic.
subscription level and choice of investment. The reduced charge is only applicable on
withdrawals made between 6 March 2020 to
• You agree not to take out another Lifetime ISA in 5 April 2021, when it will return to 25%.
any tax year you subscribe to The Share Centre
Ready-made Lifetime ISA. • If you do withdraw from your Lifetime ISA you
may incur a withdrawal charge which could lead
• Prior to application you agree to take action to you receiving back less than you paid in.
to ensure that your details held by HMRC are
accurate and up to date. • If you save in a Lifetime ISA rather than a pension
scheme you may lose the benefit of your
employer’s contributions.
The Risks
• Saving in a Lifetime ISA may affect your current
Before making any decisions, you need to be aware and future entitlement to means tested benefits.
of the risks involved in any type of investment:
• Inflation will reduce the real value of your
• The value of your investments and any income investment(s) and could reduce your purchasing
they may provide can fall as well as rise, and power in the future.
you may get back less than you originally
invested. What you get back will depend on the • The charges on the fund(s) you choose may be
performance of the investments you choose. increased by the fund manager(s).
Nothing is guaranteed and past performance is • We may increase our account charges.
not a reliable indicator of future performance.
• Governments could change the way our
• Once you reach age 50, you cannot make any tax-efficient accounts and other investments
further contributions. are taxed.
• If you become a non-UK resident for tax • Investing in funds is considered to be more
purposes, you cannot make any further appropriate for medium to long-term
contributions. investments i.e. three to five years or more.
• A withdrawal charge of 25% may be applied if
funds are withdrawn from a Lifetime ISA before
you are 60, unless you are using the proceeds to
buy your first home or are terminally ill. You may
also incur this charge if you transfer your Lifetime
ISA to another type of account. This charge has4
5
questions and answers
What is an ISA? ISA can only invest in any one of the three funds
ISA is short for ‘Individual Savings Account’. An ISA of funds: ES Share Centre Multi Manager Income
enables you to invest without having to pay UK Fund, ES Share Centre Multi Manager Growth and
income tax or Capital Gains Tax on any profits you Income Fund, and ES Share Centre Multi Manager
make. Even if you’re a higher rate tax-payer, there’s Growth Fund.
nothing more to pay. ISAs don’t have to be reported Please note that we don’t offer a Cash ISA or an
on tax returns either. Innovative Finance ISA.
What types of ISA are there? How much can I invest in an ISA?
If you decide to invest in an ISA, you need to consider The government sets a limit on how much you can
what type of ISA is appropriate for your needs. There invest in an ISA each tax year. This year (2020/21) you
are four types of ISA: can invest up to £20,000 in an ISA. Your allowance
• Stocks & Shares ISAs enable you to invest in the can be split between a Stocks & Shares ISA, a Cash
stock market through investments including many ISA or an Innovative Finance ISA as you wish, and if
Unit Trusts, OEICs, investment trusts, shares, you are eligible you can invest up to £4,000 of your
corporate bonds, gilts and Money Market funds. allowance into a Lifetime ISA. Bear in mind that your
annual ISA allowance expires at the end of the tax
• Cash ISAs enable you to save money via year (5 April) so there’s no catching up next year if
building society and bank deposits, and Money you don’t invest the full amount. It’s a case of use it
Market funds. or lose it!
• Innovative Finance ISAs enable you to earn Please note that it is your responsibility to ensure
income by investing in Peer to Peer loans. that you have not exceeded your total ISA allowance
each year.
• Lifetime ISAs are specifically designed to help
young people over 18-39 year old save for their
first home and / or their retirement (on or after What is a Lifetime ISA?
their 60th birthday). A Lifetime ISA has many of the same features as an
ISA, it enables you to invest without having to pay
What types of ISA do The Share Centre offer? UK income tax or Capital Gains tax on any profits
We offer a Ready-made Lifetime ISA which can you make. Even if you are a higher rate tax payer
invest in any one of, or a combination of, the three there’s nothing more to pay. Lifetime ISAs don’t have
funds of funds managed by us: ES Share Centre to be reported on tax returns either. The Lifetime
Multi Manager Income Fund, ES Share Centre Multi ISA also has some additional features. You may be
Manager Growth and Income Fund and ES Share eligible to receive a government bonus of 25% on
Centre Multi Manager Growth Fund. the money you pay in, however some withdrawals
may be subject to a withdrawal charge of 25%. This
We also offer two types of Stocks & Shares ISA: charge has been reduced by the government to
Self-select and Ready made. Our Ready-made 20% as a response to the coronavirus pandemic.6
The reduced charge is only applicable on depend on how much money you have paid into
withdrawals made between 6 March 2020 to 5 your Lifetime ISA during the previous month.
April 2021, when it will return to 25%.
For example: if you have paid in £100 in April you
will receive a bonus of £25. If you haven’t made a
Am I eligible for a Lifetime ISA? payment in that month you won’t receive a bonus
To open a Lifetime ISA, you must be aged 18-39 payment the following month.
years old and resident in the UK for tax purposes.
You can also be a Crown employee serving Can I make withdrawals from my account?
overseas, or their spouse/civil partner. In any one
tax year, you must only contribute to one Lifetime ISA. You can sell investments and either reinvest the
proceeds or withdraw them. A 25% withdrawal
charge will apply on unauthorised withdrawals
How much can I invest in a Lifetime ISA? (which are explained in more detail below) from
The government has also set a limit on how a Lifetime ISA. This charge has been reduced by
much you can invest in a Lifetime ISA. The annual the government to 20% as a response to the
allowance for a Lifetime ISA is currently £4,000, coronavirus pandemic. The reduced charge is
which forms part of your overall ISA allowance only applicable on withdrawals made between
for the tax year. If you choose to invest £4,000 in 6 March 2020 to 5 April 2021, when it will return
a Lifetime ISA you will have £16,000 allowance to 25%.
remaining to split between a Stocks and Shares ISA,
a Cash ISA and an Innovative Finance ISA. What is an ‘Authorised withdrawal’?
You must pay into your Lifetime ISA before your In certain circumstances you can withdraw money
40th birthday and you can then continue to make from your Lifetime ISA, including any government
payments until the day before your 50th birthday. bonus, without incurring a withdrawal charge.
Please note that it is your responsibility to ensure Retirement: You can withdraw funds from your
that you have not exceeded your total ISA allowance Lifetime ISA for any reason at any time following your
each year. 60th birthday.
First Time Home Purchase: You can use
How does the Lifetime ISA government bonus the money in your Lifetime ISA (including the
work? government bonus) to buy your first home up to a
The government will pay in a 25% bonus on any value of £450,000. Please remember you can only
savings you pay into your Lifetime ISA which means do this 12 months from the date of the first payment
you can receive up to an extra £1,000 per year in into your account. For example if you open a
addition to what you pay in yourself. Lifetime ISA and made a payment into the account
on 6 April 2020 you will be able to make an
This bonus will be paid to your account monthly and
authorised withdrawal for a house purchase from
the amount of bonus you receive each month will
6 April 2021 However, if you open a Lifetime ISA on7
6 April 2020 but didn’t make your first payment into For example if you pay in £4,000 to a Lifetime
the account until 6 October 2020 you would not be ISA account you will receive a government bonus
able to make an authorised withdrawal for a house of £1,000. If you then decide to withdraw all the
purchase until 6 October 2021. (This is the case for money from the account a 25% withdrawal charge
each Lifetime ISA you hold.) You will need to provide of £1,250 would be deducted so the amount you
us with details of your conveyancer and your receive would be £3,750.
instruction to pay the funds directly to them.
The penalty charge will be deducted prior to funds
We will then make the payment within 30 being withdrawn from the account and this amount
days from the day of receipt of the required will then be returned directly to HMRC.
documentation from them. For more information
please contact our Customer Services Team on This charge has been reduced by the government
01296 41 41 41. to 20% as a response to the coronavirus
pandemic. The reduced charge is only applicable
Terminal Illness: If you are diagnosed with a on withdrawals made between 6 March 2020 to
serious illness and are advised that you have 12 5 April 2021, when it will return to 25%.
months or less to live you are entitled to make an
‘authorised withdrawal’ from your Lifetime ISA What are the fees relating to my account with
for any reason. We will require written evidence The Share Centre?
from a registered medical practitioner. For more
With a Ready-made Lifetime ISA there is no dealing
information please contact our Customer Services
commission, administration fees or initial charges.
Team on 01296 41 41 41.
There are ongoing fund charges which are
Death: In the event of your death your Estate will still
automatically taken from the fund, these charges are
be entitled to receive the government bonus. Your
dependent on the fund, and are detailed in the Key
personal representatives will be required to provide
Investor Information Document.
some documentary evidence. For more information
please contact our Estates Team on 01296 41 41 51. Details of all fees are set out in the applicable
account tariff and are available at share.com.
What is an ‘Unauthorised’ withdrawal?
If you need access to your funds for any other reason Can I change my mind?
than the ones detailed as authorised this will be Applications for a Lifetime ISA are subject to a 30
considered to be an Unauthorised withdrawal which day cancellation period from the day we receive it.
will be subject to a withdrawal charge of 25% (which Cancellation rights apply to the account but not to
is the deduction of the government bonus and your request to purchase investments. Once a valid
any growth or interest on this, plus a 5% charge). instruction for an investment has been dealt, you
The charge will be calculated based on the actual may not cancel it.
amount of money withdrawn from the account.8
Can I take an income from my investments? in the funds will be dependent on your saving aims
The Lifetime ISA is intended as a way of saving for and your attitude to risk which is why there is a
your first home and/or retirement, not to provide choice of three funds. Further information on the
an income. funds can be found on share.com.
You may withdraw money from the account at any As situations and investment goals can change
time however some withdrawals may be subject to overtime you should regularly review your Ready-
a 25% withdrawal charge. This charge has been made Lifetime ISA account.
reduced by the government to 20% as a response
to the coronavirus pandemic. The reduced charge When will my money be invested?
is only applicable on withdrawals made between With most fund investments, dealing usually
6 March 2020 to 5 April 2021, when it will return takes place once a day at a time determined
to 25%. by each individual fund manager, and is based
on the price at the valuation point of each fund.
How will tax affect my investments? The Share Centre has a 10:00am cut-off for orders
For investments held within our tax-efficient Ready- in the ES Share Centre Multi Manager funds to be
made Lifetime ISA, any income will be free of UK processed on that day. Any orders received after
income tax. Any capital growth will not be subject 10:00am will generally be processed the next
to UK Capital Gains Tax. working day.
How do I invest in a Fund? What documentation will I receive?
Firstly, ensure that you have read the Key Investor When you make an investment, we will normally
Information Document specific to your chosen send you a contract note confirming details of
fund(s). You should keep a copy of this document, your investment.
which is available from our website.
How can I keep track of my investments?
You should also keep a copy of this Key Features
Document, as it contains specific information We will send you statements showing the value
relating to the operation of the account. When you of your investments and all transactions since the
have made your investment decision, you can previous statement. You may view your investments
purchase your fund by using money in your account. online at share.com.
Money can be paid into your account in a variety of We will also keep you informed about any corporate
ways including debit card, cheque or Direct Debit. actions (such as takeovers and mergers) which may
affect your investments.
How can I use the different funds?
We will send you an annual statement showing
The Lifetime ISA is intended as a way of saving for the value of your investments and the impact all
your first home and/or retirement, how you invest applicable charges have had on your underlying9
investments. You may view your investments and be sold prior to the transfer. Transferring an existing
historic charges statements online at ISA will count towards your Lifetime ISA allowance
www.share.com. of £4,000 but does not count against your current
year’s overall ISA allowance, unless the ISA has
How will my investments be registered? received current year subscriptions. Therefore if
you do transfer £4,000 from an existing ISA into a
For the Ready-made Lifetime ISA your fund
Lifetime ISA your Lifetime ISA allowance would be
investments will be registered in a Nominee
fully subscribed, however you would still be able to
Company owned by Cofunds Limited. For further
pay in £20,000 to a Cash ISA, Stocks and Shares ISA
details, please see The Share Centre Terms of
or an Innovative Finance ISA, unless the ISA being
Business applicable to your Account.
transferred had received current year subscriptions.
Can I transfer my investments to another We are unable to accept a Lifetime ISA to Lifetime
account provider? ISA transfer.
You can transfer your account, subject to our terms If you wish to transfer your Lifetime ISA at
of business and acceptance by your new account The Share Centre to another Lifetime ISA account
provider. The manner in which any transfer is elsewhere you can do so, but it must be transferred
completed may vary and your holding might need in its entirety — we will not process a partial transfer.
to be sold so that the proceeds can be transferred Please note that if you transfer a Lifetime ISA to any
to your new provider. In this scenario, dealing other type of account (including Cash ISAs, Stocks
commission may be payable. Details of transfer and Shares ISAs or Innovative Finance ISAs) this will
and dealing charges are set out in our applicable be considered to be an unauthorised withdrawal
account tariff. For Lifetime ISA accounts, you will and the amount that you are transferring may be
need to provide a completed transfer authority to subject to a 25% withdrawal charge (which is the
the new account provider, who will contact us to deduction of the government bonus and any growth
arrange the transfer. or interest on this, plus a 5% charge). This charge
Please be aware that the value and income from has been reduced by the government to 20%
investments can fall as well as rise and you will as a response to the coronavirus pandemic.
not be able to deal in your investments during the The reduced charge is only applicable on
transfer. Therefore, you may potentially lose income/ withdrawals made between 6 March 2020 to 5
growth whilst the transaction is being completed. April 2021, when it will return to 25%.
Can I transfer investments between ISAs? What happens if my deceased spouse held an
ISA with you?
You can transfer any money held in an existing Cash
ISA or Innovative Finance ISA, and any investments If your spouse or civil partner died on or after
held in an existing Stocks & Shares ISA to a Lifetime 3 December 2014, you may be entitled to an
ISA with The Share Centre. Any investments that are Additional Permitted Subscription (APS) equal to the
not supported within our Lifetime ISA will need to value of your deceased spouse’s ISAs, this includes10
the funds held within your Lifetime ISA together investment firm and all retail customers receive
with any accrued government bonus. This APS is in the maximum regulatory protection under FCA
addition to your personal annual ISA allowance but rules All investments held on behalf of our
is only available for a limited time period related to customers are registered either in the name of
your spouse’s estate. Even if you did not inherit your Share Nominees Limited, which is a bare trustee
spouse’s ISA assets, you will be entitled to the APS, nominee company or, in the case of certain unit
provided you were in a committed marriage at the trusts and open-ended investment companies, in
time of their death. If you did inherit your spouse’s a Nominee Company owned by Cofunds Limited.
ISA assets, these may be used as part of the
subscription once beneficial ownership has passed What would happen if The Share Centre went
to you. into administration?
Please note that you can open a new Stocks and Because customer investments are held in a
Shares ISA with The Share Centre and use this totally separate company to The Share Centre,
additional allowance even if your spouse’s ISA was in the unlikely event that The Share Centre was
held elsewhere, however you will only be able to placed in administration, your money and
make cash subscriptions. investments would be safely ring-fenced and held
in trust for you.
Please note you cannot use this additional allowance
within a Lifetime ISA with The Share Centre.
Compensation arrangements?
What if I have a complaint? The Share Centre contributes to and is covered
by the Financial Services Compensation Scheme
We want you to be entirely happy with the service (FSCS), details of which are available from
you receive from us. If you have a complaint, www.fscs.org.uk.
please contact us by any means, including letter,
telephone or email. If you are not happy with
the way your complaint is handled, you may
have the right to refer the matter to the Financial Who is the account provider?
Ombudsman Service, Exchange Tower, London, E14 The Share Centre Limited is authorised and
9SR. Making a complaint will not affect your right to regulated by the Financial Conduct Authority under
take legal action. reference number 146768. The Share Centre is
registered in England, company number 2461949;
How safe are my investments? registered office: Oxford House, Oxford Road,
The Share Centre Limited is authorised and Aylesbury, Bucks HP21 8SZ.
regulated by the Financial Conduct Authority
(FCA) and is a member of the London Stock What if I need further information?
Exchange. As such, The Share Centre must fulfil Please visit share.com for further help & support.
all the relevant regulatory requirements of an11
What might a Lifetime ISA be worth at age 60? The table below provides information if you are
The following illustrates the value of a Lifetime ISA, using the Lifetime ISA to save for retirement and
at age 60, depending on the age at which you start may not be relevant if your saving aim is for a first
saving and assuming that you have subscribed home purchase.
the full amount at the beginning of each tax year
up to age 50 and have received the Lifetime ISA
government bonus.
What might a Lifetime ISA be worth at age 60?
Age saving Total amount Total amount Estimated Estimated Charges and
in a lifetime paid in by paid in, plus outcome at age outcome at estimated
ISA started lifetime ISA lifetime ISA 60 from 0% age 60 from 5% inflation would
saver/investor government return return reduce a 5%
bonus return to
£ £ £ £ £ %
18 132,000 165,000 98,395 374,808 2.94%
25 104,000 130,000 82,531 263,029 2.94%
30 84,000 105,000 69,776 195,989 2.94%
35 64,000 80,000 55,692 137,994 2.94%
40 44,000 55,000 40,143 87,825 2.94%
Lifetime ISA charges taken into account in the table may vary over time. They do not include any fee or charge that is payable
by or on behalf of you to a provider in respect of the Lifetime ISA. And they do not include any charge relating to the qualifying
investments held in the Lifetime ISA.12
An example OEIC fund Impact of charges on your fund investment
Normally, shares in an OEIC fund have a single The table below illustrates the total effect of charges
price, which means there is no bid/offer spread; and expenses on a typical fund investment.
merely a single price at which you buy and sell.
The initial charge is deducted from the amount you The charges used in calculating these figures are
invest, and the remaining subscription invested at illustrative. The actual charges applicable to the
the single price. fund you choose are detailed in the Key Investor
Information Document.
Annual charges and expenses are deducted from
income. Figures are based on accumulation shares.
Please note that when comparing the example
below, the maximum that can be invested into a
Lifetime ISA is £4,000 per year.
Initial Charge 0%
Annual Management Charge 0.75%
Additional charges and expenses 0.8%
Ongoing Charges Figure 1.55%
Investments within a Ready-made Lifetime ISA
At end Investment to Effect of deductions What you might get
of year date (£) to date (£) back at 5.00% (£)
Lump sum Monthly Lump sum Monthly Lump sum Monthly
1 4,000 1,200 63 10 4,140 1,223
3 4,000 3,600 196 89 4,435 3,798
5 4,000 6,000 338 250 4,750 6,556
10 4,000 12,000 739 1,054 5,642 14,342
The last line on the table shows that over 10 years the effect of the total charges and expenses could amount
to £739.00 (lump sum investment) or £1,054.00 (monthly saver). Putting in another way, if the growth rate were
to be 5.00% per year, which is in no way guaranteed, the total charges would have the effect of reducing the
growth rate to 3.50% per year on the lump sum investment or 1.80% on the monthly saver.13
Please note:
l T he Share Centre’s dealing charges and
account costs are not included.
l T he effect of charges is based on a lump
sum investment of £4,000, with an assumed
growth rate of 5% per year. This growth rate
is laid down by our regulator, the Financial
Conduct Authority, to demonstrate the effect
of charges and expenses on an investment
and is not guaranteed. The figures do not take
into account any additional discount you may
receive on your investment.
l The inflation rate is assumed at the Bank of
England long-term target rate of 2%.16
PO Box 2000 Aylesbury Buckinghamshire HP21 8ZB
phone 01296 41 41 41 deal 01296 41 42 43
email info@share.co.uk web www.share.com
The Share Centre Limited is a member of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority under
reference number 146768. Registered in England number 2461949. Registered office Oxford House Oxford Road Aylesbury Bucks HP21 8SZ.
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