The Lifetime ISA
The Lifetime ISA- The government have belatedly published draft legislation on how the Lifetime ISA will work. This means that savers can look forward to next April for the planned launch of the Lifetime ISA.
So from April anyone age over 18 and under 40 will be able to pay up to £4,000 a year into the Lifetime ISA and receive a bonus from the government of 25% of monies paid in.
You can continue paying until your age 50.
If you have a Help to Buy ISA you will be able to transfer this into the Lifetime ISA in 2017.
Beware of Penalties
You can take money out of the pot to put a deposit on a house or you are allowed to take monies out when you reach age 60.
The penalties for other withdrawals will be quite severe.
Although the government describes the exit penalties as small, they amount to 25% of whatever you take out (including the loss of any bonus and growth).
In reality (having read the small print) you may end up not only paying HMRC back the bonuses but also lose some of your monies as well.
This product is only worth considering if you are absolutely sure that you will use it for the penalty free withdrawal options of either using it as a deposit for a house or you can wait to withdraw monies at age 60. So unless you have access to other savings, then we think that this is a product to AVOID.