Lifetime ISAs (LISAs) launched on 6 April. They are available to people aged between 18 and 40 irrespective of whether or not they already own a home.
Like other ISAs, you can choose to put your savings into stocks and shares or cash. And as with ISAs, it is important to choose a suitable fund for your hard-earned savings, preferably with the help of a professional financial adviser.
You can save up to £4,000 a year into a LISA and the government adds a bonus of £1,000 for every £4,000 you save. Bonuses are paid until you cash in your LISA or turn 50, so you could get a total of £32,000 from the government if you save the maximum each year from the age of 18. A couple, each taking out a LISA, can save and receive double the amount.
You can use your LISA to help pay the deposit on your first home, which must be worth no more than £450,000, or to supplement your pension income. You can’t make partial withdrawals from your LISA and you will have to pay a 25% tax bill if you don’t use the money to buy a home, or to supplement your pension when you turn 60.