Since April 2017, you’ve been able to open a Lifetime ISA if you’re aged between 18 and 40. For every £4 you pay in, the government will add £1. You can pay in a maximum of £4,000 a year to receive the £1,000 bonus from the government, which will be added at the end of the tax year. You can carry on earning bonuses until you are aged 50 and continue saving after that without bonuses.
Those with a Help to Buy ISA can transfer those savings into a Lifetime ISA or continue saving into both. However, you can only use the bonus from one to buy a house. The Help to Buy ISA, will be withdrawn in November 2019.
Savers can tap into their pots if they want to use some or all of the money to buy their first home, or wait until they are 60 to withdraw cash and their bonus tax-free. You can withdraw the money at any time, but if you do so before you turn 60 or if the money is not to help by your first home, you’ll have to pay a 5% charge, and you’ll lose the government bonus and any interest or growth on this. This is because the savings are designed to either purchase your first home or as retirement income after the age of 60.
The government has stressed that the Lifetime ISAs are not a replacement pension but rather an additional savings vehicle.