Lifetime Isa: What the new saving scheme means for you

Unveiled as a surprise Budget announcement by then-chancellor George Osborne back in March 2016, the Lifetime Isa has finally come into practice.

Simon Wagman, from Blick Rothenberg Chartered Accountants, explains what the new saving scheme means for you.

• When does the new ISA scheme start?

April 2017.

• Who is eligible?

Anyone between the age of 18 and 40.

• How much can you save?

If you save £4,000 a year, the government will give you a bonus of £1,000.

There is no monthly maximum contribution - you can save as little or as much as you want each month, up to £4,000 a year.

• What can you use the money for?

To save for a deposit on a first home or to save for retirement.

After your 60th birthday you can take out all the savings tax-free.

This is significantly better than current pension arrangements and should act as an incentive for young people to save.

• What are the restrictions?

You can withdraw the money at any time before you turn 60.

However, you will lose the government bonus, the interest on this bonus, and pay a 5% charge.

• So will it do you any good?

Anita Monteith, from the Institute of Chartered Accountants, told ITV News the scheme will benefit those people who have money to spare at the end of the month.

However, with many young people struggling to make their money go further than rent and bills, she said there will be little benefit for them.