The government has published its Savings Bill covering the details and bonuses to those taking out the Lifetime ISA from April 2017.
The Bill confirms individual’s annual contributions of £4,000 per year while receiving a 25% government bonus when funds are put towards retirement or a first property.
The bill seems to indicate that the government intends to stick with its original plan for Lifetime ISA providers to claim the bonus for individual savers at the end of each tax year.
The bill also confirms that the government bonus plus interest or growth on it will be removed, and an additional 5% penalty levied if savers withdraw their funds before 60 or under any circumstances.
Savings can be withdrawn tax-free to purchase a first home of up to £450,000 or after the age of 60.
Steven Cameron Pensions Director at Aegon, said:
“The government has always been clear that the bonus would be paid on no more than £4000 each year, equating to £1,000. The Bill confirms that individuals won’t be allowed to pay in additional sums above £4,000, which would not have attracted a bonus.
“The government was also known to be considering allowing individuals to borrow from their Lifetime ISA, without losing the government bonus if repaid within certain rules. This seems to have been dropped. ”