This week's Budget introduced the 'lifetime' individual savings account (ISA/LISA), a new type of tax-free savings account.
Individuals will be allowed to contribute up to GBP4,000 per year out of their after-tax income. The government will add an extra 25 per cent, equivalent to tax relief at 20 per cent, until the account holder reaches 50. After the age of 60 the account holder can extract the proceeds tax-free, or before that age use them towards a deposit on a first home.
Savers will be allowed to make withdrawals at any time for other purposes, but will then have to repay the 25 per cent top-up plus any interest or growth on it as well as a five per cent penalty.