Lifetime ISA: The Savings (Government Contributions) Bill
18 October 2016
18 October 2016
The Lifetime ISA is being legislated for through the Savings (Government Contributions) Bill and is due to become available from April 2017.
The Savings (Government Contributions) Bill will introduce the Lifetime ISA, where people aged from 18 to 40 will be able to open an individual savings account to which they can contribute up to £4,000 each year up to age 50, and receive a government bonus of 25% on those contributions. The Lifetime ISA account holders will be able to access their funds in full to buy their first home (worth up to £450,000), from age 60, or if terminally ill. Funds withdrawn in other circumstances will be subject to a 25% charge, which returns the government bonus element (including any interest or growth on that bonus) and applies a small additional charge to ensure the product is used for long-term saving.
The Bill will also introduce Help to Save, which will be open to working people in receipt of Universal Credit and have a minimum weekly household earnings equivalent to 16 hours at the national living wage or Working Tax Credit. It will work by providing a 50% government bonus on up to £50 of monthly savings into a Help to Save account. The bonus will be paid after two years, with savers able to continue saving for a further two years, meaning that people can save up to £2,400 and benefit from government bonuses worth up to £1,200.
Details on the design of the Lifetime ISA are provided in an updated design note.
Geographical extent - The provisions of the Bill extend to all four nations of the United Kingdom (Clause 5 of the Bill makes payment of bonuses an excepted matter in the Northern Ireland Act 1998. This provision will require legislative consent from the Northern Ireland Assembly).