Announced by George Osborne in his final Budget last year, LISAs will be available from 6 April 2017 to anyone between the ages of 18 and 39.
Unlike other ISAs, LISAs offer a 25 per cent Government bonus worth up to a maximum of £1,000 each year.
This means that an 18 year old who invests the maximum amount until they turn 50 will receive bonuses from the Government worth a total of £32,000. Bonuses are no longer paid after the age of 50, but LISAs will continue to accrue interest.
Funds invested in a LISA cannot be withdrawn without incurring significant penalties, unless they are used for the purchase of a first home or withdrawn after the age of 60.
The Government bonus will be paid as a lump sum in the first year after the launch of the LISA and then on a monthly basis in future years.
LISAs can be held at the same time as a Help-to-Buy ISA. Help-to-Buy ISAs are set to close to new savers in November 2019.
There are currently only a limited range of providers offering LISAs, with many Isa providers saying it is too early to tell how LISAs will work in practice.