The Lifetime ISA (LISA) is a type of ISA designed to help people aged between 18 and 39 save for their first home, or retirement.
A LISA lets you save up to £4,000 per year. At the end of the tax year the Government will top up your ISA with a 25% bonus. You will be able to earn a 25% bonus on your LISA contributions up until the age of 50.
Any money you put into your LISA will be included as part of your annual ISA contribution limit. Tax-free funds, including the government bonus, can then be used to help buy a first home worth up to £450,000 at any time from 12 months after first saving into the account.
Funds, including the government bonus, can be withdrawn from the LISA from age 60 tax-free for any purpose. LISA holders can also access their savings if they become terminally ill. Withdrawals at any time for other purposes can be made but a 25% government withdrawal charge will be applied.
The government will provide a bonus of 25% on all contributions to a LISA within the limits. The bonus will be paid only on the amount paid in, and not on any interest or investment growth.
This means that if you invest £4,000 in a year, but after investment the pot increases or decreases before the claim is made, you will still receive a bonus of £1,000.
Read the full document for more information.
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The contents of this fact sheet do not constitute financial advice. The impact of taxation (and any tax relief) depends on individual circumstances. This has been prepared based on our current understanding of UK Law, Taxation and HMRC practice, all of which could be subject to change in future. The value of investments can fall as well as rise and it may not always be possible to receive back the sum initially invested. Past performance is not necessarily a guide to future investment returns.