A Lifetime ISA is a flexible way to save and invest for your first home or later life. You can open one if you’re between 18 and 39 years old. For (grand)parents wanting to help their (grand)kids buy a home, giving them cash to put in a LISA is a great way to do it as anyone can contribute to the individuals LISA.
 
As with other ISAs, you can choose to save cash or invest in the stock market, and your money can grow free from UK tax. But the real benefit is an extra 25% from the government of up to £1,000 a year.
 
You can invest up to £4,000 each tax year and the government will add a further 25%. So for every £4 you save, you get £1 extra – up to £1,000 per tax year.
 
Once in your account the bonus counts as money, so you’ll get interest on it too (or investment growth/loss).
 
You need to be between 18 and 39 to open a Lifetime ISA. But you can still pay in – and get the government bonus – until you turn 50.
 
After a minimum of 12 months, you can use the money to make an eligible house purchase for a property worth up to £450,000. Or you can wait until you’re 60 and take your money out then.
 
If you want to take money out before you’re 60 and you aren’t buying your first home, there’s usually a 25% government charge. That means you could get back less than you originally put in.
 
With a Lifetime ISA your investment choice will probably depend on when you need to use the money. Less than five years, then cash is likely to be your best option. But if you’re planning to save for longer than five years, you might want to think about the stock market.
 
Remember stock market investments can go down as well as up in value, so you could get back less than you put in.
 
And if you decide to use the LISA to buy your first home, you can keep it open and save for retirement.