Saving money: Could you boost your savings by £2,000 in 2020 with a Lifetime ISA?

The Lifetime ISA can be used by eligible people to buy their first home, or for saving for later life. In order to open one, a person must be the age if 18 or older, and under the age of 40.

This means that while £4,000 can only be paid in per tax year, some may be able to save £8,000 in a Lifetime ISA in 2020.

Steve Code, Insurance Director at Unity Mutual, explained: “To maximise the tax-free savings within a Lifetime ISA, an investor can invest £4,000 between now and 5th April 2020 to ensure they receive the maximum bonus of up to £1,000 from the Government.

“After 6th April 2020, when the new tax year starts, investors can again invest another £4,000 (assuming the rate stays the same for Lifetime ISAs) and receive up to another £1,000 bonus payment into their Lifetime ISA.

“This means that theoretically two payments of up to £4,000 can be made in 2020 (one in the 2019/20 tax year and another in the 2020/21 tax year).”

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He added: “Lifetime ISAs are a valuable tool for the government to help tackle the problem of young people struggling to get onto the property ladder.

“They reward committed saving but also have a degree of flexibility too.”

It’s possible to withdraw money from a Lifetime ISA, however depending on the reason, it may be that the withdrawer pays a charge.

The fee isn’t payable if the reason for withdrawing is if the saver is buying their first home, aged 60 or over, or terminally ill with less than 12 months to live.