From 6th April 2017, the new lifetime ISA will be available to any adult under the age of 40. Individuals will be able to deposit up to £4,000 per tax year, and receive a 25% bonus from the government on any savings put into the accounts before their 50th birthday.
The tax free savings and the government bonus can be put towards a deposit for a first home in the UK worth up to £450,000 at any time, from 12 months after having first saved into the account. Should an individual wish to make contributions towards their retirement, the funds, including the bonus, may be withdrawn from the age of 60 tax-free.
Lifetime ISA holders can also withdraw money before their 60th birthday for other purposes. However, a 25% government charge will be applied to the amount of the withdrawal, along with a “small additional charge”
Meanwhile, from 6th April 2017 the overall annual ISA subscription limit rises from £15,240 to £20,000. Additionally, the Junior ISA subscription limit will increase from £4,080 to £4,128.
An individual will only be able to pay into one Lifetime ISA each tax year, as well as a Cash ISA, a Stocks and Shares ISA and an Innovative Finance ISA.
The addition of the new ISA is good news for people wanting to save for their future and the bonus goes a long way to assist and boost savings!