The creation of the new savings vehicle was among the most eye catching from today’s Budget.
The Chancellor said it would be possible to use it for two reasons – either for buying a new home because the Government wants to help younger people onto the property ladder - or for retirement.
But the detail of the Budget papers revealed that it could go beyond this.
Over their lifetime, savers will be able to have contributions of £128,000 matched by the government for a maximum bonus of £32,000, with investment growth on both their contributions and the government bonus.
They can save up to £4,000 each year and will receive a 25% bonus from the government on every pound they put in.
The Budget papers stated: “Whilst this (Lifetime ISA) is a product aimed at encouraging saving for the long term, the government understands that circumstances change so wants to ensure that people can access their own money if they need it whilst also keeping an incentive to leave funds invested for the long term.
“The government will consider whether Lifetime ISA funds plus the government bonus can be withdrawn in full for other specific life events in addition to buying a first home.”
The document does not state what other events these might include.
The document stated: “The government proposes that savers can make withdrawals at any time for other purposes, but with the bonus element of the fund plus any interest or growth on it returned to the government, and a small 5% charge applied.
“The government will also explore with the industry whether there should be the flexibility to borrow funds against the Lifetime ISA without incurring a charge if the borrowed funds are fully repaid. In the US some retirement plans allow 50% to be borrowed up to a maximum of $50,000.”
Tax-free funds, including the government bonus, can be used to buy a first home worth up to £450,000 at any time from 12 months after opening the account. The funds, including the government bonus, can be withdrawn from the Lifetime ISA from age 60 for any other purpose.
The overall ISA allowance will rise from £15,240 to £20,000 in April 2017, the Chancellor also revealed.
People can continue to open a Help to Buy: ISA until November 2019, as planned, the Treasury said.
Savers can also choose to open a Lifetime ISA, but will only be able to use the government bonus from one of their accounts to buy their first home.
During the 2017-18 tax year, those who already have a Help to Buy: ISA will be able to transfer the savings they have built up into the Lifetime ISA and still save an additional £4,000.