Treasury cuts Lifetime ISA exit charge to 20%

Amid punishing circumstances for investors, the Treasury brought some good news last week, offering some relief for those holding Lifetime ISAs.

The Lifetime ISA (LISA) was introduced in 2017 and lets you save up to £4,000 every tax year towards a first home or your retirement, with HMRC adding a 25% bonus on top of what you save. That means you could get a chunky £1,000 of free cash annually. Plus, you earn interest on whatever you save, and as it’s an ISA, that interest is tax-free. Up until now however their has been a exit charge of 25% for anyone who wishes to withdraw their funds, unless the purpose of the withdrawal is to purchase a first home or retiring.

The government has now temporarily changed its rules surrounding Lifetime ISAs in a bid to help those who want to access funds early in light of the coronavirus outbreak.

In a statement on 1 May, HM Treasury announced individuals whose income had been affected by the pandemic would no longer be charged an additional wi