New Lifetime ISA
The Lifetime Individual Savings Account was made available from 6 April 2017, and provides a longer- term tax free savings account with an additional government bonus included annually.
HMRC guidance includes:
Opening a Lifetime ISA
- The Applicant age range is18-40 years.
- There is no tax on interest, income or capital gains from cash or investments held in the account
Saving in a Lifetime ISA
- You can save up to £4,000 each year in a Lifetime ISA.
- There’s no maximum monthly savings contribution.
- Savings contributions can be made until you reach 50; after then the account can stay open but no further savings can be added.
- The £4,000 limit, if used, will form part of your overall annual ISA limit (£20,000 in tax year 2017 to 2018).
- Lifetime ISAs can hold cash, stocks and shares qualifying investments, or a combination of both.
Government bonus
The account grants you a government contribution of 25% of the money you save, up to a maximum of
£1,000 per year.
Withdrawals
Withdrawals can be made at any time but are subject to charges of 25% on the amount withdrawn.
Charges do not apply if the account owner:
- Is using funds towards a first home
- Is aged 60 or over
- Is terminally ill with less than 12 months to live
In the event of death, the Lifetime ISA will end on this date and there is no charge for withdrawing assets or funds from the account.
Transferring a Lifetime ISA
The Lifetime ISA is transferable from one Lifetime ISA account to another with a different provider; but withdrawal charges will incur for transfers to a different type of ISA.
In 2017/18 only, you can transfer the total balance of your Help to Buy ISA, as it stands on 5 April 2017, into your Lifetime ISA without affecting the £4,000 limit.
Saving for your first home 
Account savings can be used towards buying first home of up to £450,000, with no withdrawal charge, however, the purchase must be made using a mortgage.
The fine print also requires the purchasers use a conveyancer or solicitor to act on their behalf in the purchase, and the funds must be paid direct to them from the Lifetime ISA provider.
If two people choose to combine their Lifetime ISA’s who are both first time buyers, the government bonus can be used and applied to the purchase. A first time buyer can jointly use Lifetime ISA savings another person who is not a first time buyer but they will not be able to use their Lifetime ISA without incurring a withdrawal charge.
The Lifetime ISA must have been opened for at least 12 months before funds can be withdrawn and used towards a first home.