All you need to know about Lifetime ISAs

FANCY receiving a £32,000 bonus on your savings?

New Lifetime ISAs are now being rolled out.

Here’s a look at how they could help – and what the catches are:

Am I eligible for the Lifetime ISA?

You must be aged 18-39.

How much can be saved?

Savers can put in as much or as little as they want, up to £4000 per tax year.

You can continue to pay into a Lifetime ISA until you reach 50. The account will stay open after then, but you can’t make any more payments into it.

What about the bonus?

Savers will receive a 25% bonus on the amounts paid into a Lifetime ISA. So someone paying in the maximum of £4000 per year would receive a tax-free bonus of £1000 that year.

What can I use the Lifetime ISA for?

You can withdraw the funds to buy a first home or, from the age of 60, without restrictions.

For first-time buyers, the home you buy must be in the UK, have a price of £450,000 or less, be the only home you will own, be where you intend to live, and be purchased with a mortgage.

Two first-time buyers can club together to put their Lifetime ISAs towards a home – but the £450,000 cap still applies.

I’ve got a Help to Buy ISA. Can I save into a Lifetime ISA?

Yes. You can transfer the full balance of your Help to Buy ISA into your Lifetime ISA.

You can also choose to save into both schemes – but you can only use the bonus from one to buy a house.

What if I want to take cash out before turning 60 for a reason other than buying my first home?

If a saver becomes terminally ill, they can withdraw their funds, including the bonus, without a charge. But savers withdrawing funds before they turn 60 for other reasons face a charge of 25% of the amount withdrawn.