As the end of the 2023/24 tax year falls in April, there’s still time for savers to benefit from the two financial years in 2024, if they haven’t already.

The Lifetime ISA limit of £4,000 counts towards the annual ISA limit of £20,000. It means savers who have already used up the latter allowance can’t deposit money into their Lifetime ISA until April 6, when the 2024/25 tax year begins.

There are rules which apply to this account. For instance, savers must make their first deposit into the ISA before they’re 40, and buyers can’t get the Lifetime ISA bonus if they are getting the Help to Buy ISA bonus.

It’s also crucial savers are aware of the withdrawal rules before they deposit their money into a Lifetime ISA.

Lifetime ISA holders can withdraw the money without penalty if they are:

• Buying their first home (and it meets the qualifying criteria)
• Aged 60 or over
• Terminally ill, with less than 12 months to live.

Savers withdrawing money from the account for any other reason will face a withdrawal charge of 25 per cent.

It aims to recover the government bonus but could mean people need to withdraw more money than they require.

Buying a first home with a Lifetime ISA

Savers can use Lifetime ISA savings to buy a first home if all of the following criteria apply:

• The property costs £450,000 or less
• They buy the property at least 12 months after making the first Lifetime ISA deposit
• They use a conveyancer or solicitor to act for them in the purchase – the ISA provider will pay the funds directly to the conveyancer or solicitor
• The house is bought with a mortgage

If a first-time buyer is purchasing with someone else who also has a Lifetime ISA, then they can both use their savings and government bonus, provided they are both first-time buyers and meet all the aforementioned conditions.