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Introducing the New Lifetime ISA

From April 2017, those under the age of 40 can contribute to a lifetime ISA to the sum of £4,000 each tax year for the purpose of purchasing a first home or for retirement.

At the end of each tax year the government will provide a 25% bonus on the contributions, so if you save £4,000 in the tax year the bonus will be £1,000. Savers will be able to make Lifetime ISA contributions and receive a bonus from the age of 18 up to the age of 50.


  • Contributions sit within the overall £20,000 ISA contribution limit
  • Government bonus paid on contributions of up to £4,000 per tax year (no monthly contribution limit)
  • Government bonuses can be received on contributions up until the age of 50.
  • Previous years ISAs can be transferred as a way of funding the Lifetime ISA without affecting the overall ISA limit.
  • Savers can contribute to one Lifetime ISA in each tax year, as well as a cash ISA, a stocks and shares ISA, and an innovative finance ISA, within the new overall ISA limit of £20,000 from April 2017.


Lifetime ISA managers will claim the bonus from HMRC. Where you are purchasing a home having contributed in that same year, you will be able to receive your bonus in-year.


First home

  • Ability to withdraw 100% of Lifetime ISA
  • Can only be used toward first home located in UK with a purchase value of up to £450,000.
  • Lifetime ISA must be held for 12 months from opening before withdrawals (inclusive of Government Bonus) can be made for a house purchase.
  • If a joint purchase both can use their Lifetime ISAs.
  • Rules as per “Help to Buy” ISA (in other words must be for a deposit on our own property not buy-to-let).
  • Withdrawals paid directly to conveyance (if purchase falls through money paid directly back to ISA).


But what about the Help to Buy ISA?

The Help to Buy ISA will continue to be open to new savers until 30 November 2019 and open to new contributions until 2029. Savers can save in both but will only be allowed to use the government bonus from one account to buy their first home.


From the age of 60 full or partial withdrawals can be made for any purpose free of tax.

Other circumstances for partial withdrawal

To encourage savers to leave funds invested for the long term the government proposes that withdrawals can be made at other times but the government bonus (including any interest or growth on that bonus) returned to the government and a 5% charge applied. Read more here.