The first cash-only Lifetime ISA is being launched this week, allowing adults under the age of 40 to put aside cash sums in order to save for their first home or their future retirement.
The Lifetime ISA was introduced in April, but initially only share-based investments were available. The Skipton Building Society is now offering the first cash Lifetime ISA, with an interest rate of 0.5%.
Under the scheme, savers aged between 18 and 39 can invest up to £4,000 a year and will receive a 25% bonus on contributions from the government up until their 50th birthday.
Funds can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn from the age of 60, tax-free.
The savings and bonus can be used towards a deposit on a first home worth up to £450,000.
However, where the funds are withdrawn before the age of 60 the account holder will lose the government bonus (plus any interest or growth on this) and will be liable to pay a 5% surcharge.