The Association of Independent Professionals and the Self-Employed (IPSE) has warned the freelance community of a new 25 per cent withdrawal charge from Lifetime ISAs from April 5th 2018, a charge it claims to be “freelancer-unfriendly”.
The IPSE believes this new fee is a particular blow to self-employed individuals who have unpredictable incomes and understandably have more need to gain access to the £4,000 tax-free cash that a Lifetime ISA can hold.
There are just three circumstances in which withdrawals from a Lifetime ISA will not incur the 25 per cent withdrawal charge. This includes the scenario where an individual becomes terminally ill.
The IPSE is also highly critical of the restrictive eligibility rules for the Lifetime ISA, available only to individuals aged between 18 and 39.
The IPSE said: “Self-employed incomes are variable and people should be aware of the large 25 per cent penalty for removing finances.