Moneybox is just one of a handful of providers offering the cash version of the government-backed home and pension saving scheme.

The new deal takes joint top spot for its pure cash offering along with The Nottingham with its 1.25% rate. However, Unity Mutual offers a higher 1.5%, though it isn’t a pure cash product, even though it guarantees the rate.

Moneybox’s Lifetime ISA is powered by Investec and can be opened via its app with a minimum deposit of £1. Transfers from any existing ISAs are accepted and there are no account fees for the product.

The saving and investing app firm launched its first cash Lifetime ISA in July 2019 which was powered by OakNorth Bank. To date it has helped customers buy over £100m worth of property and its new deal with Investec will enable it to offer the product to even more customers.

This means new customers will open the Lifetime ISA powered by Investec while existing customers will continue to remain with OakNorth Bank, also offering 1.25%.

Ben Stanway, Moneybox co-founder, said: “The Lifetime ISA offers much-needed support to young people trying to get on the property ladder, and we’ve been overwhelmed with the positive response from customers to our existing Lifetime ISA.

“By working closely with Investec, we look forward to helping many more people save towards their first home and benefit from the fantastic government bonus available, as well as a market-leading rate.”

The Lifetime ISA was launched in April 2017 to help people aged 18-39 save for their first home or retirement. They can put away up to £4,000 each tax year towards a property or pension and receive a government bonus of 25% (up to £1,000 a year).

Withdrawals in the first 12 months of opening the Lifetime ISA or for any reason other than buying your first home or retirement from age 60, are subject to a 25% penalty on the whole amount which means you will get back less than you put in.

See YourMoney.com’s Lifetime ISA guide for more information.