One of the Budget’s big surprises was the announcement of the Lifetime ISA (almost certain to be called a LISA), to be launched in April 2017. Details of this will be subject to consultation, but the main features already decided are:

• Only those under the age of 40 will be eligible to invest.
• The maximum annual contribution will be £4,000 to which the government will add a 25% bonus, eg a £100 contribution will become worth £125 in the plan.
• Funds, including the government bonus, can be used to buy a first home (worth up to £450,000) at any time from 12 months after opening the account, and can be withdrawn tax-free with the government bonus from age 60 for use in retirement.
• Withdrawals can be made at any time for other purposes, but with the bonus element of the fund plus any interest or growth on it forfeited and a 5% charge applied.

The government will examine the possibility of allowing penalty-free repayable loans against the plan and allowing penalty-free access before age 60 for specific life events other than purchasing a first home. Monies built up in a Help to Buy ISA will be transferable into the new plan during 2017/18. Savers with both a Help to Buy ISA and a Lifetime ISA will only be able to use the government bonus from one of these schemes to buy their first home.