Tomorrow (6 April) marks the start of the 2017/18 tax year. That means you have the option to invest in an Individual Savings Account (ISA) if you wish to.
You can choose between a cash ISA, stocks and shares ISA, or an innovative finance ISA. Or, you can put money into a new Lifetime ISA (LISA) from 6 April 2017.
The Government are launching a LISA to help young people plan for the future. To make sure you know how much you can save towards a first home or pension, we're explaining what the LISA limit is.
What is the LISA limit?
You can save up to £4,000 into a LISA during each tax year as long as you don't save more than the annual overall ISA limit.
The annual overall ISA limit is the maximum amount you can save into ISAs each year. The limit for 2017/18 tax year will be £20,000. Anything that you contribute to a LISA will count towards this.
You'll get a 25% bonus on what you pay into a LISA from the Government. So if you pay in the maximum of £4,000, you'll receive a tax-fee bonus of £1,000 that year. You can get the Government bonus on any money that you transfer into a LISA from another ISA.
You can invest what you earn from the Government bonus as you like and earn interest on it.
When can I withdraw my funds?
You won't receive a charge to withdraw funds if:
• after 12 months, you use the money to help you buy a first home worth up to £450,000,
• you become terminally ill, or
• you reach the age of 60.
You can withdraw the funds held in your LISA before you turn 60, but you'll have to pay a charge of 25% on whatever you withdraw. However, you won't face an exit charge if you want to withdraw in the first year (2017/2018).
Want to save up for a first house? Help to Buy ISAs are available until 30 November 2019. You can still choose to open a LISA alongside a Help to Buy ISA but you can only use the Government bonus from one to buy your first home.
You can transfer the balance of your Help to Buy ISA into your LISA at any time if the amount isn't over £4,000. In the 2017/18 tax year, you can transfer the total balance of your Help to Buy ISA (as it is on 5 April 2017) into your LISA without affecting the £4,000 limit.
You'll have to pay a withdrawal charge, if you want to transfer your LISA to a different type of ISA.