A guide to Lifetime ISAs
Lifetime ISAs (also known as LISAs) are a new type of ISA designed to help people aged between 18 and 40 save up for their first home, or retirement. If you take out a Lifetime ISA, the Government will give you a bonus worth 25% of what you pay in, up to a maximum of £4,000 per year. That means you could earn an extra £1,000 each year.
- How a Lifetime ISA works
- Who qualifies
- When are Lifetime ISAs available?
- How to open a Lifetime ISA
- Where to go for more information on Lifetime ISAs
How a Lifetime ISA works
If you’re buying a home with someone else, you can both take advantage of separate Lifetime ISAs.
A Lifetime ISA 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. Savers will be able to earn a 25% bonus on their ISA contributions up until the age of 50.
For example, if one year you put £1,000 into your Lifetime ISA, the Government will add an extra £250. This would leave you with £1,250 at the end of the tax year.
Any money you put into your Lifetime ISA will be included as part of your annual ISA contribution limit.
What you can use your Lifetime ISA for?
If you want to take advantage of the bonus, you can only use your ISA:
- To buy your first home (worth up to a maximum of £450,000), or
- Once you turn 60.
Your account will have to have been open for at least 12 months before you can access the 25% bonus, if you are looking to use it to buy your first home.
You can open a Lifetime ISA if you are between the age of 18 and 40.
When are Lifetime ISAs available?
6 April 2017.
How to open a Lifetime ISA
You will be able to apply for a Lifetime ISA through a bank or building society either online, by telephone or in a branch.