From Morningstar: [published_date]

Lifetime ISAs, initiated in April 2017, are for under-40s aiming for homeownership and retirement savings. They replaced Help to Buy ISAs but existing holders can still contribute. Government adds a 25% bonus up to £1,000 annually. Withdrawal penalties apply, with a 25% charge. Hold a Cash ISA for easier access to funds.

Conditions for Lifetime ISA withdrawals are limited to buying a first home or waiting until age 60, otherwise incurring a 25% penalty. A maximum of £4,000 can be saved yearly until age 50 for a 25% bonus up to £1,000. Different types of Lifetime ISAs cannot be opened in the same tax year.

According to HMRC data, 56,100 account holders withdrew funds for first home purchases in 2022/23, averaging £13,877. This may not be enough for a deposit, as the average first-time buyer deposit for a three-bedroom house in 2023 was £34,500. The Lifetime ISA is a new and growing product within the ISA universe.



Read more at Morningstar: Lifetime ISA: What Are The Rules?