Category Archives: Budget





Here is a summary of the Chancellor Rishi Sunak’s Budget:





Here is the latest update of tax rates and allowances:



Income tax allowances frozen

The Budget saw the Chancellor announce that as of April, there will be a freeze on the amount of money employees earn before paying income tax at £12,570, with this to continue until the middle of the decade. The Office for Budget Responsibility estimates that the move will see an extra 1.3m people start to pay income tax by 2026. The level at which employees start paying the higher rate of tax will be frozen at £50,270, with an extra 1m people set to fall into the 40% band within five years as a result. The policy will bring an extra £8bn a year for the Treasury, analysis suggests. Iain McCluskey of PwC calculates that freezing the personal allowance will impact low earners who may currently be under the threshold. Meanwhile, the Chancellor also announced that inheritance tax thresholds, pensions lifetime allowances and annual capital gains tax exemptions are to be frozen at 2020/2021 levels until 2025/26. Several papers note that the freezes to personal allowances will see the tax burden increase to its highest level since 1969, hitting 35% of GDP, while Blick Rothenberg said the freezes mark “a clear tax rise for all taxpayers”.

The Daily Telegraph, Page: 4 The Daily Telegraph, Page: 1 The Times, Page: 1 The Times, Page: 2 Financial Times, Page: 1 Financial Times, Page: 10 The Guardian, Page: 1,4 Daily Mail, Page: 10 The I, Page: 15 Daily Mirror, Page: 12 Daily Express, Page: 5 Daily Star, Page: 2 BBC News BBC News

Corporation tax lifted to 25%

The headline rate of corporation tax will rise from 19% to 25% from 2023, the Chancellor has announced, an increase he says is necessary to make public finances sustainable in the long-term. Mr Sunak said he wanted to reduce borrowing by raising more tax revenue rather than by cutting public spending, adding: “The only other alternative would be to increase the rates of tax on working people, but I don’t think that would be right”. He also announced that businesses with profits under £250,000 will be spared the increase, seeing a 19% rate instead. EY’s Chris Sanger said the Chancellor “seems to be focusing on small rather than small and medium-sized businesses”. Meanwhile, PwC’s Jon Richardson said that following years of a declining headline corporation tax rate, Mr Sunak’s “hand has clearly been forced” by the pandemic and the strain on public finances. KPMG analysis shows that the 25% rate exceeds the EU average of 21.7% but is lower than the US’ 27% and Japan’s 30.62%.

The Guardian, Page: 1, 4 The Times, Page: 6 The Daily Telegraph, Page: 1, 4, 5 The I, Page: 11 Daily Mail, Page: 12 The Independent BBC News

No penalty for one-off late filing

A move to make rules around filing of tax returns “fairer and more consistent” was announced as part of the Budget, with those filing returns late on a one-off basis now set to be spared HMRC’s £100 penalty. The new system, which will be introduced for VAT taxpayers from 2022 and for those filing income tax self-assessments from 2023, will see heftier penalties for repeat offenders than the current rules. The Budget Red Book said: “The new late payment regime will introduce penalties proportionate to the amount of tax owed and how late the tax due is.” The Government will legislate the shift in the Finance Bill 2021, with the reform forecast to raise £5m in 2022/23, £90m in 2023/24 and £155m in 2024/25 and 2025/26. Meanwhile, a crackdown on evasion and avoidance is expected to raise £2.2bn by 2025/26. BDO’s Dawn Register comments that catching tax cheats will help repair public finances, although RSM’s George Bull fears the increased tax take from the crackdown will “not be a game-changer”.

The Daily Telegraph, Page: 10 Financial Times, Page: 8

Tax break concern over super-deduction

Under a new tax “super-deduction” detailed in yesterday’s Budget, companies investing in new plant and machinery assets will be able to deduct 130% of the investment from their taxable income for the next two years. This means they would be able to cut their tax bill by up to 25p for every £1 that they invest. PwC has suggested the move may boost “levelling up” as manufacturers are more concentrated outside London and the south-east. However, Labour’s Dame Margaret Hodge suggested the way the tax was structured was a “big concern”, saying that the “devil will be in the detail” as it appears the initiative may be “little more than a tax break” for Amazon and other tech giants. The Telegraph notes that an online sales tax may still be put in place to target such firms, with Mona Bitar of EY suggesting “greater certainty is needed in this area” .

The Daily Telegraph The Daily Telegraph, Page: 7 The Guardian, Page: 9 The Sun, Page: 6

Hospitality sees VAT cut extended

The 5% reduced rate of VAT for the hospitality sector will continue for another six months, the Chancellor has announced. Rishi Sunak told the House of Commons the reduced rate would be extended until September 30. He also announced there will be an interim rate of 12.5% for another six months until April 2022. In total the move will see VAT cut by around £5bn. Christian Mole of EY warned that the sector will face challenges, even as restrictions are lifted, calling for ongoing Government support and describing the sector-specific support being offered as “encouraging”.

BBC News City AM

Tax rethink for banks on the cards

The Government is due to roll back a surcharge on banks’ corporation tax to help to boost the sector’s competitiveness, with a review of tax on banks coming in the autumn. The move could see banks brought closer in line with other sectors where corporation tax will rise to 25% from 2023. Without reform, banks could face a rate of around 33%. Isabelle Jenkins of PwC said banks will welcome the Government’s review of the sector’s tax burden, while Richard Milnes at EY noted: “It seems that banks should still brace themselves for an overall increase in tax on profits from 2023.”

The Times, Page: 11 The Daily Telegraph, Business, Page: 3

New freeports confirmed

The Chancellor has announced the eight English that are to be designated as freeports, claiming that policy for the low-tax areas will be “on a scale we’ve never done before” and will “exemplify the future economy”. East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City, Plymouth, Solent, Thames and Teesside have all been chosen. The freeport model allows companies to import goods tariff-free, with critics suggesting they can act as tax-avoidance sites for the wealthy. Questions have been raised over regulation and governance, with concerns over whether the tax breaks could breach trade agreements.

The Guardian, Page: 8 Daily Mail The Independent


Three-months added to business rates holiday

The business rates holiday rolled out to support firms during the pandemic has been extended for another three months, with the break, which had been set to run for a year and conclude at the end of the month, now running until the end of June. Real estate adviser Altus Group said the cost of extending the relief will be around £3bn. With some retailers having been criticised for accepting business rates relief despite being able to remain open under lockdown rules, a number of big chains last year committed to repaying £2.2bn of the support. Following yesterday’s announcement of the three month extension, Tesco, Sainsbury’s, Asda and Morrisons said they would not take advantage of the relief.

The Daily Telegraph, Page: 5 Daily Mail The Guardian Daily Mirror


Stamp duty holiday to continue

The stamp duty holiday has been extended by six months until the end of September, an extension that includes a tapering of support, with the nil-rate band gradually lowering from June. The extension applies to all transactions in England and Northern Ireland, meaning buy-to-let investors will continue to benefit from the tax savings. The deadline for buyers to take advantage of the higher £500,000 nil-rate band has been extended by three months. This means that buyers can save up to £15,000 in tax if they can complete their sales by June 30. After this date, the nil-rate band will drop to £250,000 until September 30, with the maximum tax savings falling to £2,500 during this period. From October 1, the nil-rate band will fall back to its original level of £125,000. On the extension, Sean Randall, a partner at Blick Rothenberg, said: “Buyers due to complete between April 1 and June 30 will breathe a sigh of relief; estate agents, surveyors and mortgage brokers will rub their hands with glee; and conveyancers, exhausted by the pressure to complete before April 1, will look ahead with dread.”

The Daily Telegraph The Times The I Daily Express, Page: 8 BBC News

OBR: Stamp duty holiday will lift prices

The Office for Budget Responsibility (OBR) expects the extension of the stamp holiday to “result in some additional transactions and raise house prices a little” – but added that house prices will fall back again as pressure on the labour market increases. While house prices are forecast to climb 5.1% over 2021 and then slip 1.7% in 2022, the OBR expects growth of 0.8% in 2023, 3.9% in 2024 and 4.3% in 2025. The analysis suggests that house prices will be 13.5% higher at the beginning of 2025 than they were at the start of 2020. A November report from the OBR predicted that growth in the period would be around 11.4%.

The Daily Telegraph

Lenders back loan support plan

Britain’s biggest mortgage lenders have backed a Government scheme to help people get on the property ladder, with Lloyds, NatWest, Santander, Barclays and HSBC among the banks agreeing to offer 95% mortgages to creditworthy customers from next month. The initiative will see the Government guarantee part of the loan, compensating the bank in the event of repossessions. David Farr at Grant Thornton said that the scheme was likely to “prop up demand and therefore house valuations”, while Howard Archer of the EY Item Club said he was worried about a housing market correction later this year or next year that could leave buyers in negative equity.

The Times, Page: 4


Furlough extension confirmed

Chancellor Rishi Sunak has confirmed that the furlough scheme, which was due to end in April, will be extended to the end of September. The extension will mean the Government will continue to contribute 80% towards wages to help firms keep staff on the payroll. As of July, employers will start paying 10% of furloughed employees’ pay, with this increasing to 20% from August. It was also announced that a fourth round of self-employment grants will help support those left out of previous support because they had not filed tax returns. The fresh round of grants, which will be worth up to £7,500, will see support for an additional 600,000 people. The Office for Budget Responsibility expects the cost of the furlough scheme to be £10.8bn extra between April and September.

The Daily Telegraph Daily Mail Daily Mirror City AM

UK staff take fewer sick days in 2020

Figures from the Office for National Statistics (ONS) show that workplace absences due to illness fell in 2020. The UK’s sickness absence rate declined from 1.9% to 1.8% last year – the lowest level since its records began in 1995. The ONS said that coronavirus lockdowns, restrictions and social distancing rules in the workplace may “have led to less exposure to germs and minimised some of the usual sickness absences”. It added: “Homeworking could allow people to work from home when they were a little unwell … they might not have travelled to a workplace but feel well enough to work from home.” The report shows 118.6m working days were lost because of sickness or injury in 2020, equating to 3.6 days for each worker.

The Guardian

Apprentice cash doubles

Payments to employers that take on apprentices are to be doubled, with employers to receive £3,000 for each new apprentice they hire between April and September. KPMG’s Shashi Prashad believes the doubling of the grant could stimulate new jobs and Zlatina Loudjeva of PwC said the Chancellor “has pulled some of the most immediate levers available to get people back into work.”

The Times, Page: 11 The Daily Telegraph, Business, Page: 5


Sunak reveals ‘restart’ grants

Retail, hospitality and personal care businesses, which are set to reopen from April as coronavirus restrictions are eased, are to be offered support in the form of the new Restart Grant. The Chancellor announced that retailers will be eligible for grants of up to £6,000 per premises, while pubs, restaurants and salons, which will be closed until June, will be able to claim grants of up to £18,000. Detailing the support in his Budget announcement, the Chancellor said the new grants will total an extra £5bn of help. He added that this takes the Government’s direct cash support to business to £25bn.

City AM


German regulator files complaint against Greensill Bank

Germany’s financial watchdog BaFin has reportedly filed a criminal complaint over suspected balance sheet manipulation at Greensill Bank. A probe by BaFin found irregularities over how the bank had booked certain assets, with the watchdog tasking KPMG with performing a forensic investigation last year. The probe found that Greensill had booked claims for transactions that had not yet occurred but which were accounted for as if they had been.

The Daily Telegraph The Guardian, Page: 32 Financial Times

Deloitte strikes $80m Malaysian settlement over 1MDB

Deloitte has agreed an $80m settlement with Malaysian officials over its role as an auditor to scandal-hit state investment fund 1Malaysia Development Berhad.

Financial Times, Page: 21


Vaccines to drive economic recovery, says OBR

The Office for Budget Responsibility (OBR) says the UK’s coronavirus vaccine programme will help drive a “swifter and more sustained” economic recovery, with the Government’s independent forecaster saying it expects growth of 4% this year and 7.3% in 2022. The latter would mark the highest growth rate since official records began and see the economy hit its pre-pandemic level by the middle of next year – six months earlier than previously estimated. The OBR analysis noted that British households have built up savings of around £180bn in the past year, with it forecasting that around a quarter could be spent once coronavirus-related restrictions are lifted, pointing to a potential “degree of euphoria” among consumers. It also warned that economic uncertainty remained “considerable”. The OBR also said unemployment is set to peak at 6.5%, considerably lower than the 11.9% expected last July.

BBC News The Guardian, Page: 10 Daily Mail The Sun, Page: 6 City AM


Budget response

Reflecting on the details of yesterday’s Budget, Labour leader Sir Keir Starmer said the scale of what the Chancellor announced “is nowhere near ambitious enough”, saying the measures are “a quick-fix, papering over the cracks”. Ian Blackford, the SNP’s leader at Westminster, said the measures are “carefully laying the ground for more Tory austerity”, while Plaid Cymru said it was a “Budget of half measures and quick fixes”. Meanwhile, Institute for Fiscal Studies director Paul Johnson said the overall tax burden is set to hit its “highest sustained level in history.” Separately, Chris Sanger, head of tax policy at EY, described the Budget as “three years of support, followed by three years (and more) of pain”, adding “that time is the Chancellor’s friend in his aim of replenishing the Government’s coffers.” The FT’s Merryn Somerset W ebb says all taxes that affect income and wealth “are set to rise substantially in real terms”, while Iain Martin in the Times says Rishi Sunak “earmarked tax rises when the focus should be wholly on dynamism”.

BBC News BBC News Financial Times, Page: 13 The Times, Page: 27 Evening Standard

Contact Paul Southward

Paul Southward



With more shout outs than an Instagram Influencer, the Chancellor Rishi Sunak delivered his second and perhaps his most challenging Budget statement today.

Speculation and lobbying prior today’s statement were rife, so what did Rishi dish up?

Here is a summary of the key points: –

CRISIS: Coronavirus support

  • Furlough to be extended until the end of September
  • Government to continue paying 80% of employees’ wages for hours they cannot work
  • Employers to be asked to contribute 10% in July and 20% in August and September
  • Support for the self-employed also to be extended until September
  • 600,000 more self-employed people will be eligible for help as access to grants is widened to include some new businesses
  • £20 uplift in Universal Credit worth £1,000 a year to be extended for another six months
  • Working Tax Credit claimants will get £500 one-off payment
  • Minimum wage to increase to £8.91 an hour from April

THE COST: State of the economy and public finances

  • UK economy shrank by 10% in 2020
  • Economy forecast to rebound in 2021, with projected annual growth of 4% this year
  • Economy forecast to return to pre-Covid levels by middle of 2022, with growth of 7.3% next year
  • A whopping 700,000 people have lost their jobs since pandemic began
  • Unemployment expected to peak at 6.5% next year, lower than 11.9% previously predicted
  • UK to borrow a peacetime record of £355bn this year.
  • Borrowing to total £234bn in 2021-22

STEALTH: Taxation

  • No changes to rates of income tax, National Insurance or VAT
  • Personal income tax allowance to be frozen at £12,570 from April 2022 to 2026
  • Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026
  • Corporation tax on company profits to rise from 19% to 25% in April 2023
  • Rate to be kept at 19% for about 1.5 million smaller companies with profits of less than £50,000
  • Stamp duty holiday on house purchases in England and Northern Ireland extended to June, with no tax liability on sales of less than £500,000
  • No changes to inheritance tax or lifetime pension allowance or capital gains tax allowances

CARE: Health and education

  • £1.65bn to support the UK’s vaccination rollout
  • £19m for domestic violence programmes, funding network of respite rooms for homeless women
  • £40m of new funding for victims of 1960s Thalidomide scandal and lifetime support guarantee
  • £10m to support armed forces veterans with mental health needs

CULTURE: The arts and sport

  • £400m to help arts venues in England, including museums and galleries, re-open
  • £300m recovery package for professional sport and £25m for grassroots football

GROWTH: Business, digital and science

  • Tax breaks for firms to “unlock” £20bn worth of business investment
  • Firms will be able “deduct” investment costs from tax bills, reducing taxable profits by 130%
  • Incentive grants for apprenticeships to rise to £3,000 and £126m for traineeships
  • VAT rate for hospitality firms to be maintained at reduced 5% rate until September
  • Interim 12.5% rate to apply for the following six months
  • Business rates holiday for firms in England to continue until June with 75% discount after that
  • £5bn in Restart grants for shops and other businesses forced to close
  • £6,000 per premises for non-essential outlets due to re-open in April and £18,000 for gyms, personal care providers and other hospitality and leisure businesses
  • New visa scheme to help start-ups and rapidly growing tech firms source talent from overseas
  • Contactless payment limit will rise to £100 later this year

VICES: Alcohol, tobacco, and fuel

  • All alcohol duties to be frozen for second year running
  • No extra duties on spirits, wine, cider or beer
  • Fuel duty to be frozen for eleventh consecutive year

SERVICES: Environment, transport, infrastructure, and housing

  • New UK Infrastructure Bank to be set up in Leeds
  • It will have £12bn in capital, with aim of funding £40bn worth of public and private projects
  • £15bn in green bonds, including for retail investors, to help finance the transition to net zero by 2050

NATIONAL: Nations and regions

  • £1.2bn in funding for the Scottish government, £740m for the Welsh government and £410m for the Northern Ireland executive
  • 750 UK civil servants to be relocated to new Treasury campus in Darlington
  • £1bn Towns Fund to promote regeneration in 45 English towns
  • £150m for community groups to take over pubs at risk of closure
  • First eight sites for freeports in England announced


HM Treasury confirms changes to business rates reliefs

HM Treasury confirms changes to business rates reliefs

Small music venues, pubs and cinemas are set to benefit from a cut to business rates.

On 27th January the Financial Secretary to the Treasury Jesse Norman has confirmed that the government will increase the retail discount from one-third to 50 per cent, extend that discount to cinemas and music venues, extend the duration of the local newspapers office space discount, and introduce an additional discount for pubs.

The announcement came in the form of a parliamentary written statement and further details are expected to be confirmed in next month’s Budget.

The full statement was made as follows: –

The Government will increase the retail discount from one-third to 50 per cent, extend that discount to cinemas and music venues, extend the duration of the local newspapers office space discount, and introduce an additional discount for pubs.

The increase in the level of the retail discount from one-third to 50 per cent will apply in 2020/21 for eligible retail businesses occupying a property with a rateable value less than £51,000.

The extension of the retail discount is to those eligible music venues and cinemas with a rateable value of less than £51,000.

The extension of the £1,500 business rates discount for office space occupied by local newspapers will apply for an additional 5 years until 31 March 2025.

The pubs discount will provide a £1,000 discount to eligible pubs with a rateable value of less than £100,000 in 2020/21. This is in addition to the retail discount and will apply after the retail discount.

All reliefs are subject to state aid rules and apply in England only.

The Government confirms that it will fully fund local authorities for awarding these reliefs and provide new burdens funding to local authorities for administrative and IT costs.

Local authorities should start preparations to include these changes now, and act promptly to ensure eligible business receive the increased support in their rates bills at the start of the financial year.

The Government expects local authorities to ensure these changes are applied for the start of the 2020/21 billing period. The Government will publish amended guidance for the retail discount reflecting these changes as well as refreshed pubs relief guidance for local authorities.

The Barnett formula will be applied in the usual way. Consequentials for the devolved administrations will be confirmed at the Budget.

Contact Paul Southward.

Paul Southward




Sajid Javid  [Now Rishi Sunak] has set the date for his first Budget on Wednesday 11th March 2020.  The Budget is the opportunity for the Chancellor to deliver an overview of how the UK economy is doing based on a five-year forecast for the economy and public finances as produced by the Office of Budget Responsibility, an independent body.

This is Sajid’s [Rishi’s] first Budget and he will be keen to make his mark and set out his personal style for future Budgets to come.  The Conservative party will want to make plans to improve the UK economy, which has been faltering under the Brexit uncertainties.

Of course, we will not know what the full Budget will include but we do have some pointers from the relatively restrained Tory manifesto tax policies.  Against this will be the constraints set by the economy forecast as the Chancellor will need to be seen to be able to “balance the books” between taxes and spending.

Here is a reminder of the Conservative Party’s Manifesto tax policies:

Tax avoidance and evasion

The taxman has been getting tougher on tax avoidance and evasion and the policies are to get even tougher to tackle opportunities for aggressive tax avoidance with a new anti-tax avoidance and evasion law, which will: –

  • Increase the maximum prison term to 14 years for persons convicted of the worst examples of tax fraud.
  • Introduce a single Anti-Tax Evasion task force within HM Revenue & Customs to coordinate their fight across all Duties and Taxes, tackling errors and deliberate non-compliance.
  • Target specific areas of tax evasion such as the construction industry, illicit tobacco sales and multi-national companies whose arrangements avoid paying UK taxes

Business tax proposals

  • Cancel the proposed cuts to corporation tax and maintain the current rate of 19%
  • Review and reform Capital Gains Tax Entrepreneur’s Relief
  • Increase the National Insurance employment allowance for small businesses.
  • No increase to VAT
  • Increase the tax credit rate for Research and Development from 12% to 13%.
  • Implement the digital services tax.
  • Increase the structures and buildings allowance from 2% to 3% and encourage investment in physical building and equipment.
  • Maintain support for creative sector tax reliefs.
  • Abolish VAT on sanitary products (following exit from EU).
  • Reduce NICs for employers that employ ex-service personnel.
  • Conduct a review of the business rates system with the aim of reducing business rates. Cutting business tax rates for small retail businesses and for local music venues, pubs and small cinemas, was specifically highlighted. Extending business rates relief for local and regional newspapers was also noted.
  • Devolve responsibility for corporation tax to Northern Ireland and consider devolving short-haul passenger duty to Northern Ireland.
  • Create up to ten free ports around the UK.
  • Review of the apprenticeship levy.

Individual’s and Taxes: –

  • Guarantee not to increase income tax.
  • Guarantee not to increase National Insurance.
  • To increase the National Insurance threshold to £9,500 in April 2020, with a goal to ultimately increase the threshold to £12,500.
  • Introduce a 3% Stamp Duty Land Tax surcharge for non-UK resident purchasers of UK property.
  • Review and reform Capital Gains Tax Entrepreneurs’ Relief.
  • Review the tax anomaly whereby some workers earning between £10,000 and £12,500 on net pay pension schemes miss out on pension benefits.
  • Maintain the State Retirement Pension triple lock.

As always, the devil will be in the Budget detail.  There are however, some significant changes already planned from April 2020: –

IR35 and off-payroll workers in the private sector

IR35 and the related employed vs self-employed rules have been a pain in the tax man’s side since the rules were introduced in April 2000.  At last the tax man has found some leverage since April 2017 when he introduced new rules for off-payroll workers in the public sector.  The changes saw a shift in the responsibility for determining a contractor’s employment status and liability to PAYE tax and national insurance, from the worker, to the engaging public body.  The result is that many more workers engaged through their own personal service companies on public body contracts have now been forced to suffer PAYE tax and national insurance on their income.

The proposals are to introduce the same rules for personal service companies engaged by large and medium sized businesses from April 2020.  Whilst the government have launched a review of the new proposals, the very best outcome that can be expected would be a postponement until April 2021.

Businesses should still be preparing for the changes as if they will still go ahead from April 2020.

Further information can be found here: –

off-payroll workers

HMRC off-payroll workers rules from April 2020

HMRC Factsheet for Contractors

Capital Gains Tax and residential property

There are several important changes proposed from April 2020: –

Accelerated capital gains tax payment and reporting

For disposals of UK residential property that give rise to a taxable gain after April 2020, a return of the gain and payment of tax must be made within 30 days of the completion.

Restriction on Private Residence Relief

Under the current rules, where there is a disposal of a property that has been someone’s private residence, the last eighteen months of ownership qualify for relief regardless of whether someone has ‘resided’ in the property during that time.  From April 2020 this period will be reduced to 9 months and could bring unwelcome tax charges to the unwary, and perhaps the unlucky.

Goodbye lettings relief

Lettings relief applies where a residential property that qualified for private residence relief had also been rented out during the total period of ownership.  The tax charge arising on the rental period of ownership was relieved by up to £40,000 (per owner).  From April 2020 this relief will all but disappear apart from a few exceptional circumstances.

Contact Paul Southward.

Paul Southward's News Roundup

Lifetime ISA

In his Budget speech today, the chancellor George Osborne announced: Lifetime ISA

This is a quick summary of how they will work.

Save up to £4,000 each year, and receive a government bonus of 25% – that’s a bonus of up to £1,000 a year. You can use some or all of the money to buy your first home, or keep it until you’re 60 – it’s up to you.

* open a Lifetime ISA account between the ages of 18 and 40, and any savings you put into it before your 50th birthday will receive an added 25% bonus from the government

* accounts will be available from April 2017

* there is no maximum monthly contribution – you can save as little or as much as you want each month, up to £4,000 a year

* the total amount you can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017

use it to save for a first home

* your savings and the bonus can be used towards a deposit on a first home worth up to £450,000 across the country

* accounts are limited to one per person rather than one per home – so two first time buyers can both receive a bonus when buying together

* if you have a Help to Buy: ISA you can transfer those savings into the Lifetime ISA in 2017, or continue saving into both – but you will only be able to use the bonus from one to buy a house

use it to save for retirement

* after your 60th birthday you can take out all the savings tax-free

* you can withdraw the money at any time before you turn 60, but you will lose the government bonus (and any interest or growth on this). You will also have to pay a 5% charge