The introduction of the lifetime ISA in the 2016 budget will provide the under 40s with a new incentive to put money aside for the future.

The government contribution of up to £4,000 a year will be an attractive option for younger people looking to save towards retirement and could build up to £160,000.

But the additional savings might affect inheritance tax planning when these savers are older.  ISA accounts are normally included if inheritance tax is due when you die, but your pension pot could be tax free.  

It remains to be seen how popular Lifetime ISAs become, but savers will have to think about the long term tax consequences before deciding which saving option is best.