What does section 1 of the Savings (Government Contributions) Act 2017 require HMRC to do?

Section 1 legally obliges HMRC to pay a government bonus into a Lifetime ISA whenever a qualifying addition is made during a relevant period. The obligation is mandatory — the legislation uses the word 'must', meaning HMRC has no discretion to withhold payment provided the statutory conditions are satisfied.

What qualifies as a Lifetime ISA under United Kingdom law for the purposes of the government bonus?

A Lifetime ISA is a savings plan defined in Treasury regulations where some or all investment income is exempt from income tax. The plan qualifies even if ISA regulations refer to it by a different name, such as a standard individual savings account. The tax exemption derives from existing ISA regulations under ITTOIA 2005.

How is the amount of the Lifetime ISA government bonus determined?

The bonus amount is not fixed in the Act itself but is determined by Treasury regulations. Currently the regulations provide for a 25% bonus on qualifying contributions up to the annual limit. For example, a £4,000 qualifying addition attracts a £1,000 government bonus. Schedule 1 contains further detailed operational provisions.

Does every deposit into a Lifetime ISA attract a government bonus?

No. Only contributions that meet the definition of a 'qualifying addition' under Treasury regulations attract the bonus, and they must be made within a 'relevant period' also specified in those regulations. This structure gives the Treasury flexibility to adjust eligibility rules and timing without amending primary legislation.

Savings (Government Contributions) Act 2017 section 1

Government contributions to Lifetime ISAs

Section 1 establishes the government's obligation to pay a bonus on qualifying contributions made to a Lifetime ISA during specified periods.

HMRC must pay a government bonus when a qualifying addition is made to a Lifetime ISA during a relevant period
A Lifetime ISA is a type of savings plan defined in Treasury regulations, which must benefit from some income tax exemption on investment returns
Both the definition of a qualifying addition and the relevant period in which it must be made are set out in Treasury regulations
The amount of the government bonus is determined in accordance with Treasury regulations, with further detailed provisions contained in Schedule 1

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