Eight weeks today the Lifetime ISA will launch to help people save towards buying their first home or retirement. In reward for their efforts, some savers could receive a government bonus of up to £32,000. But seeing as more than two thirds of people don’t even know what a Lifetime ISA is (according to pension specialist Aegon), here’s a guide to the new account.
What is it?
The Lifetime ISA – or LISA – is a tax-efficient savings account for people aged 18 to 40 wanting to buy their first home (up to the value of £450,000) or build a retirement nest egg.
How does it work?
Savers and investors can put away up to £4,000 each tax year until they reach the age of 50 in order to earn a 25 per cent annual bonus from the Government. This means those contributing the maximum annual amount will receive a £1,000 bonus every year on top of any interest or investment returns – so an 18-year-old opening the account in April 2017 and paying in £4,000 each year until they turn 50 could earn a £32,000 bonus.
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