Lifetime isa vs p2p lending

It's not yearly. It's a one-off 25% bonus made to your contributions more comparible to basic rate tax relief of a pension.

It's a neat package - but I'm not quite certain how it stacks up. Pension contributions benefit from tax relief and less NI paid, but you're taxed on withdrawal.

With a LISA you end up paying NI on those contributions but are tax free on exit. A nice bonus is you can withdraw early - And so long as you withdraw only your contributions the 25% withdrawal fee is cancelled out by the bonus.

If you're a higher rate taxpayer - Pension is the way to go. 

Sorry - I misread "yearly 25% bonus". Yes - so long as you contribute £4000 a year you get the max bonus.

There are a number of restrictions if you want to retain the 25% bonus. If you meet these, for a BR taxpayer it is better. pensions is a more complex comparison. An HR tax payer better off initially, but the majority of the 75% non-tax free withdrawal is likely to be taxed. If this is at the basic rate and you won't breach the lifetime limit, then you are probably better off (assuming tax rates don't increase and 25% tax free isn't withdrawn), but if some is likely to be taxed at the higher rate or you want more certainty on future taxation, the lifetime ISA may be a better bet. Also you can withdraw the Lifetime ISA earlier.

- PM

I don't see how the two can be compared. The LISA is a investment ISA too, it can be used on Funds on the stock market, or bonds ect. Depends on your provider (Mine is with Hargreaves). The LISA is not some type of investment asset or industry like the Peer to Peer. It is a account type.

Lifetime ISA is simply the helping hand to get onto the Property ladder, I've been paying into mine for 3 years (aquire 3k over that time in Goverment bonuses). No P2P site offers a LISA as yet. If one did exist I'd strongly sugget AGAINST it as when you come to drawdown the account, you need it in 100 percent withdrawble funds (so my F-Advisor says so). My LISA is in Funds, those can be sold over the next market trading day. (in most cases, except say Woodfords fund, but a rare yet notable example of lockin)

Invest in both a LISA and a standard ISA. Some of that Standard ISA can be used in P2P. However, its only really worth while if you are already making £500 a year+ (or 1000 for lower rate payers) in interest, otherwise its a waste in my oppuion. You cannot deduct P2P losses from your tax return which our inside the wrapper.
The best use of Tax free Compounding capital tax shelters would certainly be long term/life time investments such as Funds, like vanguard strat, Lindsell, trackers. Not really P2P loans.

P2P you'd be waiting until your 60 before you get those penny loan pieces sold on A/C haha. No idea how FCA would treat the situation, but I think P2P companies themselves know the LISA is not suitble for the platform. Just my oppuiuon but yes.

I see abit of confusion. You can pay upto 4k per year into your LISA holdings account. Goverment will pay you the bonus within 90 days, this cash is then yours to invest (or savings if a bank).
Once you get the bonus, thats all, there are no further bonuses.
If you paid in £400 a month lets say (until u reach the 10th month limit), you'd get seperate £80 bonus, per transaction added.

1st year: 4k = 1k tax free bonus.  TOTAL: 5K
2nd year = 4k = 1k tax free bonus. TOTAL: 10K
3rd year = 4k = 1k tax free bonus. TOTAL: 15K
So on;

Any compounded interest or capital growth is tax free.

Oh yes I forgot about that

Well yes of course - I should have clarified:
If you withdraw only your contributions (so £4):

- the bonus is 25% on your deposit (a bonus of £1)
- the fee is 25% on the withdrawal (a charge of £1)
The net result is you still have £4, only £1 in LISA and £3 in cash.

To withdraw more clearly costs more since you'll have "used up" your bonus - the inflated growth on that bonus can otherwise offset the extra charge but you really want to avoid cashing out the whole LISA.

This is getting out of hand - I agree with you on this.
You only received a bonus on £4000, and if you withdraw £4000 the charge and bonus necessarily cancel out (noting of course that you only receive £3000 in cash).

Obviously if you withdraw more than you contributed you end up worse of since 25% on 4000 < 25% on 5000

Edit: Sorry - My use of 'withdraw' probably invited some confusion. To 'withdraw' £x I mean to issue a request of £x, not to actually request 1.33*£x so as to be £x after the fee is deducted. I've not owned an LISA but I assume the fee is deducted on its way out, rather than from the LISA balance (which may not be liquid)