The Lifetime ISA has been designed to help those aged between 18 and 40 to save for a new home or for their retirement. Under the scheme, the government provides a 25% bonus on yearly savings of up to £4,000, and once you start saving before you are 40, you can continue using the scheme until you turn 50.

In total, this could see young savers investing up to £128,000 (over 32 years) and receiving a maximum government bonus of £32,000. The government bonus is paid annually at the end of the tax year. The £4,000 annual limit is part of the overall £20,000 ISA investment limit. Lifetime ISAs can hold cash, stocks and shares qualifying investments, or a combination of both.

The money held in a Lifetime ISA can be used to purchase a first home worth up to £450,000 anywhere in the UK or withdrawn tax-free after the saver's 60th birthday. The money invested in a Lifetime ISA can be used for other purposes but will be subject to a 25% withdrawal charge. The only other exception is if a saver is terminally ill and given less than 12 months to live.

HMRC’s guidance has been updated to provide further information on the appeal rights available to Lifetime ISA investors.