HM Treasury has updated its factsheet on the new Lifetime Individual Savings Account (ISA), which are expected to launch in April 2017. Key features of the new ISA include:
- Accounts may be opened by investors aged between 18 and 40.
- Savings invested in the account before age 50 will attract a government bonus of 25%.
- A maximum of £4,000 may be saved each year on which the 25% bonus will be paid. This equates to a maximum bonus of £1,000 a year.
- Some or all of the money can be used to buy a first home, or it can be saved until the investor is 60.
- The savings can be used for the purchase of a first home worth up to £450,000 across the country.
- Limits apply per person rather than per household.
- Investors who have a Help to Buy ISA can transfer those savings into the Lifetime ISA in 2017-18, or continue saving into both – but they will only be able to use the bonus from one to buy a house.
- After his or her 60th birthday, the investor can take out all the savings (including the bonus) tax-free.
- Money can be withdrawn at any other time, but the investor will have to pay a 25% charge. This effectively recovers the government bonus and applies a small charge.