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We’re the first high street savings provider to confirm we’ll offer a Cash Lifetime ISA from June. Our Cash Lifetime ISA will enable people aged 18 to 39 to save up to £4,000 a year tax-free plus a 25% government bonus, to help them buy their first home or fund their retirement. We’ll share specific account details of our Cash Lifetime ISA nearer the time.

What is a Lifetime ISA?

The Lifetime ISA, which was announced in the 2016 Budget, is a new type of Individual Savings Account (ISA) designed to help you save for a first home or for your retirement at the same time.

If you are aged 18 to 39, you'll be able to open a Lifetime ISA.

Lifetime ISA overview

  • you can save up to £4,000 tax-free in each year up to the age of 50
  • the government will pay a 25% bonus on these contributions, up to £1,000 a year
  • you can use some or all of the money to buy your first home, and/or
  • you can keep it in the Lifetime ISA to help fund your retirement, and can access it without charge from the age of 60
  • if you withdraw from the account for anything else, a 25% government withdrawal charge will apply. This means you could get back less than you paid in
  • the 25% government withdrawal charge will not apply to withdrawals if you are terminally ill
  • you can close your Lifetime ISA during the 2017/2018 tax year and there will be no government bonus or withdrawal charge
  • the government bonus for the 2017/2018 tax year will be paid in May 2018
  • after April 2018, your 25% bonus will be paid monthly on savings deposited before your 50th birthday

Save for your first home

  • after the first 12 months, you can use all of your accumulated balance and bonus towards a deposit on your first house in the UK, as long as the property value is no more than £450,000
  • if you're buying as a couple, both of you can have a Lifetime ISA, you can each contribute up to the £4,000 limit per year, and you'll each receive the 25% bonus on your contribution
  • the property must be purchased with a mortgage as your main residence
  • you can transfer a Help to Buy ISA balance into a Lifetime ISA during the 2017/2018 tax year without affecting your LISA allowance, or
  • you can continue saving into both a Help to Buy ISA and LISA, but you can only use the bonus from either your LISA or Help to Buy ISA to buy your first home.

Save for your retirement

  • the government bonus will apply to payments made until you turn 50
  • after your 60th birthday you can take out all or part of your LISA savings without paying a withdrawal charge
  • you can withdraw the money at any time before you turn 60, but you'll pay a 25% government withdrawal charge
  • any money you keep in the Lifetime ISA after you turn 60 will continue to earn interest tax-free

Our expert says...

Kris Brewster

The Lifetime ISA could be a real shot in the arm for people wanting to get on the housing ladder. Never before have we seen a savings account that gives such a boost to people saving to buy their first home. For people saving for their life ahead, the Lifetime ISA offers new options to consider as part of their savings mix.

Kris Brewster, Head of Products

Frequently asked questions

The total amount you can save each year into your ISAs will be increased from £15,240 to £20,000 in the 2017/2018 tax year. The rise in the ISA allowance takes effect in April 2017, at the same time Lifetime ISAs become available. For example, if you save the maximum of £4,000 into a Lifetime ISA, you would still have £16,000 left of your ISA allowance.

You're only allowed to have one Cash Lifetime ISA in each tax year. However, during the same year you can also have one Cash ISA, one Stocks and Shares ISA and an Innovative Finance (peer-to-peer) ISA, but the combined total of your savings must not exceed the annual ISA allowance of £20,000 in 2017/2018. You can also keep your Help to Buy ISA, or transfer it into a Lifetime ISA.

No. Lifetime ISAs are tax-free and form part of your ISA allowance, so any interest earned will not go towards your Personal Savings Allowance of £1,000. You can find more information on our Personal Savings Allowance page.

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