In April, HL surveyed 2,000 people and the results showed almost half of basic rate taxpayers don’t know the most tax-efficient way to save for retirement (43 percent) and only one in 20 people think a Lifetime ISA might be the most tax-efficient way to save for retirement (six percent).
Sarah Coles, a personal finance analyst at HL, commented on these results: “We haven’t a clue about the most tax-efficient home for our retirement savings.
“As a rough rule of thumb, for a basic rate taxpayer you get the biggest tax boost in a LISA and for a higher rate or additional rate taxpayer it’s a pension. But when asked to pick the most tax-efficient for them, half of people didn’t even want to hazard a guess, while among those who took a stab at an answer, only five percent of basic rate taxpayers picked the LISA.
“It’s hardly surprising there’s so much confusion, because when you’re weighing up the tax benefits of each, they aren’t even explained in the same language.