The Lifetime ISA is a longer-term, tax-free savings account aimed at helping first-time buyers aged 18-39 get on the property ladder or save money towards retirement.
You can contribute up to £4,000 in the 2020/21 tax year and the government will give you a 25% bonus on the money you put in - that's a bonus of up to £1,000 a year!
But there are some strings attached:
- You can withdraw your money without charge if you are using it to buy your first home under £450k and you’ve had the account for at least 12 months. You can also withdraw without charge once you’re over the age of 60.
- Otherwise, if you withdraw your money, the government will apply a withdrawal charge of 20% of the amount withdrawn, meaning you would have been better off with a normal ISA.
- Also, if you invest in a Lifetime ISA instead of enrolling into your company pension scheme you could lose out on contributions from your employer and your entitlement to means-tested benefits could be affected.
You can find out more by reading our frequently asked questions about Lifetime ISAs .