BUDGET 2016: ISA reforms in the 2016 budget include the introduction of a new lifetime ISA aimed at the under-40s.
The ISA, accessible from April 2017, was announced as a means to allow younger people to save, and fill a pensions gap.
Savers will be able to put up to £4,000 a year into the scheme, with a 25% contribution added by the government, to a maximum of £32,000.
As with the Help to Buy ISA announced last year, the new savings plan can be used to contribute towards a deposit on first homes worth up to £450,000, in which case the new ISA will pay out the total amount including the government contribution.
Access to the savings for other purposes is available at any time, but with a charge of 5% and any government contributions and the interest on that part forfeited.
Two of the new ISAs can also be used by savers looking to buy a house together with no penalties. Existing savers in the Help to Buy Scheme ISA can roll those savings into the new scheme.
However, savers will only be able to contribute to one scheme a year, and transfers will only be able to be made in the 2017/18 tax year.
The government said the new ISA was aimed at helping save for retirement. Unlike the current fixed term ISA, savers can hold the new lifetime schemes until they are 60, and contribute up until they are 50.
In addition to the new ISA, existing ISA schemes will see the annual contribution limit rise from £15,000 to £20,000.
• To send feedback, e-mail mike.cobb@estatesgazette.com or tweet @MikeCobbEG or @estatesgazette
