Britons could boost savings by £2,000 this year – but deadline to get substantial bonus is looming

As the end of the 2023/24 tax year will end on April 5, savers who are yet to take advantage of this financial year’s Lifetime ISA allowance will need to act fast to get the boost.

Up to £4,000 can be deposited into a Lifetime ISA each tax year, provided this is within the £20,000 annual ISA allowance.

It means those who put in up to £4,000 before April 5, and then subsequently deposit £4,000 in the 2024/25 tax year – which starts on April 6 – could get a total of £2,000 from the Government in 2024.

People can hold cash or stocks and shares in their Lifetime ISA, or both.

It’s possible to accrue interest on the savings via the interest rate offered by the Lifetime ISA provider.

A person must be aged 18 or over but under 40 to open a Lifetime ISA.

Savers can’t pay into their Lifetime ISA or earn the 25 per cent bonus once they turn 50, although the account will remain open and the savings will still earn interest or investment returns.

As it’s an ISA (Individual Savings Account), interest earned in a Lifetime ISA is tax-free.

​People can withdraw money from their Lifetime ISA fee-free if they are:

• Buying a first home and meeting the qualifying criteria
• Aged 60 or over
• Terminally ill, with less than 12 months to live.

If they don’t meet one of these authorised withdrawal reasons, a withdrawal charge of 25 per cent will apply.

When buying a first home, the saver must meet the following criteria:

• The property costs £450,000 or less
• They buy the property at least 12 months after they make their first payment into the Lifetime ISA
• They use a conveyancer or solicitor to act for them in the purchase
• They’re buying with a mortgage.

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People who have a Help to Buy ISA, which can no longer be opened, as well as a Lifetime ISA, can only use the Government bonus from one of these schemes to buy their first home.

It’s possible to transfer the money from a Help to Buy ISA to a Lifetime ISA without a penalty.

However, transferring money from a Lifetime ISA to a Help to Buy ISA would prompt the 25 per cent withdrawal charge.

People who withdraw money or transfer the Lifetime ISA to another type of ISA before they turn 60 would need to pay the 25 per cent fee.