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Enter your details to see your Lifetime ISA projection.
Calculate your Lifetime ISA government bonus, projected pot and how long until you can buy your first home or retire.
Enter your details to see your Lifetime ISA projection.
A Lifetime ISA pays a 25% government bonus on everything you put in, up to £4,000 a year, giving you up to £1,000 a year free. You must open one between age 18 and 39, you can keep paying in until you turn 50, and the money is only penalty-free for buying your first home (up to £450,000) or from age 60. Take it out for any other reason and you pay a 25% withdrawal charge.
Many people assume the 25% charge just cancels out the 25% bonus. It does not, because the charge applies to the larger total, not to your original contribution. Put in £4,000, get £1,000 bonus, and you hold £5,000. Withdraw it early and the 25% charge takes £1,250, leaving you £3,750. You are £250 down on your own money, a real loss of 6.25%. That is the single most misunderstood part of the product.
For most employed people, a workplace pension wins, because employer contributions are free money the LISA cannot match, and higher rate taxpayers get 40% relief against the LISA's flat 25%. The LISA is more attractive for the self-employed, who get no employer contribution, and for basic rate taxpayers who value being able to take the whole pot tax-free at 60, since 75% of a pension is taxable when drawn. Compare the two with the pension vs ISA calculator.
If you are saving for a first home under £450,000 and expect to buy in more than 12 months, it is usually the single best account available, because nothing else pays a guaranteed 25% on your savings. For retirement it is more finely balanced, and a workplace pension with employer contributions normally beats it. It is a poor choice if you might need the money for anything else, because of the 25% withdrawal charge.
You cannot use the Lifetime ISA for that purchase without paying the 25% charge. The cap is £450,000 across the whole UK and has been frozen since the product launched in 2017, so rising prices have pushed many London and South East buyers past it. If you are near the limit, keep some of your deposit in a standard ISA so you are not forced into the penalty.
No. You must open the account before your 40th birthday. If you open it at 39, you can keep contributing and receiving the bonus until you turn 50, so opening one shortly before 40 can still be worthwhile even with a small initial deposit just to secure the option.
The government adds 25% to every contribution. The maximum contribution is £4,000/year, giving a maximum bonus of £1,000/year. The bonus is paid monthly. You can use the LISA to buy your first home (up to £450,000) or withdraw penalty-free at age 60.
Withdrawing for any reason other than a first home or age 60 incurs a 25% charge. Since the bonus was 25% of contributions, this claws back the full bonus and about 6.25% of your own savings. The government removed the temporary COVID-era reduced penalty (20%) in April 2021.
You can use a Lifetime ISA for properties up to £450,000. If the home costs more, you cannot use the LISA and the 25% penalty applies if you withdraw. Both the property must be in the UK and you must use a conveyancer.
Yes. The £4,000 LISA allowance counts within your overall £20,000 ISA allowance. So you could put £4,000 into a LISA and £16,000 into another ISA in the same tax year. You can have both a cash LISA and a stocks and shares LISA but cannot pay into both in the same tax year.
For informational purposes only · Not financial advice · LISA rules subject to change · Verify current limits at gov.uk