The Government is creating a new Lifetime ISA, providing savers with the flexibility to save towards a first home and retirement at the same time. From April 2017, people aged 18 to 40 will be able to open and save up to £4,000 each year into a Lifetime ISA and receive a 25% bonus from the Government, paid annually after the end of the tax year.
People can make full withdrawals from their Lifetime ISA accounts for a first home purchase (subject to a house price cap of £450,000 UK-wide) or from age 60. These withdrawals will be tax free.
The Lifetime ISA is a voluntary product. For further information on the costing of this policy, please see page 9 of the Budget 2015 Policy Costings document: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508147/PU1912_Policy_Costings_FINAL3.pdf More than 350,000 first time buyers have opened a Help to Buy ISA since it became available.