What is a Lifetime ISA, and what is the catch?

Open between 18 and 39, put in up to £4,000 a year, and the government adds 25% — up to £1,000 annually. Nothing else in UK saving returns 25% before you have done anything. Your £4,000 counts toward the £20,000 ISA allowance.

The catch is the exit. You can take it out for a first home worth up to £450,000, or from age 60. For anything else there is a 25% withdrawal charge — which takes back more than the bonus gave you, because 25% of a larger number is bigger than 25% of a smaller one.

It is also changing. From April 2028 the Lifetime ISA is due to be replaced with an ISA for first-time buyers only, not retirement savers. Existing holders can keep contributing.