How does the Lifetime ISA bonus work?
After you’ve opened a Lifetime ISA for every contribution you make, up to the £4,000 tax year allowance, you’ll receive a 25% government bonus up to £1,000 a year.
The bonus will only be paid on contributions you pay into the Lifetime ISA. You will not receive a bonus on any investment growth (or interest on a Cash Lifetime ISA). The government bonus and investment gains do not count towards your contribution allowance for the tax year.
You don’t need to do anything to claim your bonus payments – we’ll sort this for you. HMRC will calculate bonus payments for your Lifetime ISA on a monthly basis and we’ll claim them on your behalf. The bonus period runs from the 6th of each month to the 5th of each month.
This doesn’t mean you have to pay in each month, for months when you don’t make a payment, no bonus is received. For each bonus payment received we’ll invest it into your Lifetime ISA.
You can keep paying into your Lifetime ISA until you turn 50. At this point, your account will stay open, and your money will still have the chance for investment growth, before you can withdraw penalty-free at 60. No further government bonus payments will be made.
It's important you know
The money in a Lifetime ISA is invested in stocks and shares. This gives good potential for your money to grown over the long-term, but there is a risk that value could go down as well as up. So you may get back more or less than has been contributed. Tax treatment depends on individual circumstances.
A Lifetime ISA must be held for at least 12 months before using it towards the purchase of a first home. By saving into a Lifetime ISA instead of a workplace pension, you could lose the benefit of employer contributions and the value could affect any entitlement to means tested benefits.
Withdrawing the Lifetime ISA: If the Lifetime ISA is used for any other reason than saving for later on in life or purchasing a first home a Government charge of 25% will incur, and you may get back less than you have paid in.