The Budget 2015 introduced the 'Help-to-Buy ISA' - a tax efficient savings scheme to help first-time buyers get on the property ladder. Here is an overview of how it will work.
The new ISA will be available from banks and building societies from Autumn 2015 for a temporary period of 4 years. Savers will be able to open accounts with an initial deposit of up to £1,000 and thereafter will be able to save up to £200 a month towards their first home in a tax-efficient environment. Whilst the opportunity to open a new account will only be available temporarily, once an account has opened, there is no limit on how long account holders can save for.
First time buyers will also receive a tax-free government bonus which will represent 25% of the amount saved (including interest). So, for every £200 saved, the Government will contribute £50. The Government contribution will be capped at an overall maximum of £3,000 (i.e on £12,000 of savings) and subject to a minimum of £400, meaning that savers must save a minimum amount of £1,600 to receive any bonus.
There will be certain conditions to ensure the Help-to-Buy ISA is used as intended.
The 'Help-to-Buy ISA will be available to all first -time buyers aged 16 and over.