Understanding Lifetime ISAs
A Lifetime ISA helps UK savers aged 18–39 save up to £4,000 per tax year, with the government adding a 25% bonus (up to £1,000). Withdrawals for buying your first home (priced under £450,000) or after age 60 are tax-free. Early, non-qualifying withdrawals incur a 25% penalty.
Choosing a provider comes down to:
- Cash LISAs: Focused on saving, ideal for short-term goals
- Stocks & Shares LISAs: Aimed at longer-term investing
- Fees & Access: Platform charges, minimum deposits, app usability
- Initial Rates: Introductory bonuses vs. long-term rates
Top Cash LISA Providers
1. Moneybox
- Rate: ~4.7% AER in Year 1 (includes bonus); drops to ~3.3–3.55% afterward
- Fees: £1/month (first 3 months free) + ~0.45% platform fee
- Minimum Deposit: £1; app-based
- Pros: Easy setup, mortgage tools, high initial return; great for first-time buyers
2. Tembo
- Rate: ~4.33% AER, interest paid monthly
- Fees: ~0.35% platform fee + ~0.17% fund fees
- Minimum Deposit: From £1; app-based
- Pros: Steady rate, user-friendly app, transparent fees
3. Plum
- Rate: ~4.6%–4.93% AER (includes 12-month bonus)
- Fee: Not detailed, but typical for automated apps
- Pros: Automated saving tools, attractive bonus structure
4. Paragon Bank
- Rate: ~3.51% AER, paid annually
- Features: Online-based, strong support, FSCS-protected
- Pros: Reliable provider with solid customer service
5. Others (Bath, Skipton, Nottingham, Newcastle)
- Rates: Range from ~2.45% to ~3.1% AER
- Best for: Savers seeking stable, traditional banking options
Stocks & Shares LISA Providers
AJ Bell
- Offer: Broad investment options — shares, ETFs, funds, bonds
- Fees: ~0.25% platform fee; trading from £1.50–£5 per trade; service fees capped
- Pros: Trusted, flexible platform suitable for both beginners and experienced investors
Dodl (by AJ Bell)
- Fees: ~0.15% platform fee (min £1/month), no trading fees
- Best for: Low-cost, app-based investing
Nutmeg
- Fees:
- Fully managed: ~0.75% (reduces over time)
- Fixed allocation: ~0.45% plus fund & spread costs
- Best for: Hands-off investors wanting managed portfolios
Comparison Snapshot
| Provider | Type | Rate / Fees | Best For |
|---|---|---|---|
| Moneybox | Cash / S&S | 4.7% → 3.3%; £1/month + ~0.45% | First-time buyers, easy setup, bonus tools |
| Tembo | Cash / S&S | 4.33%; ~0.35% + 0.17% fees | Solid rate, app-based, transparent costs |
| Plum | Cash | ~4.6%–4.93% with bonus | Automated saving with bonus rewards |
| Paragon Bank | Cash | ~3.51% | Traditional banking with reliable support |
| AJ Bell | S&S | ~0.25% platform; trading costs apply | Wide investment choice, trusted platform |
| Dodl | S&S | ~0.15% platform; no trade fees | Cost-efficient, simple investing |
| Nutmeg | S&S (managed) | ~0.45%–0.75% + underlying costs | Fully managed, beginner-friendly |
Tips Before You Choose
- Define Your Goals
- Saving for a home soon? Opt for a Cash LISA with strong interest and bonus.
- Investing for retirement? Consider a Stocks & Shares LISA that suits your risk level.
- Look at Rate vs. Fees
- High initial rates (e.g., Moneybox) may drop—check long-term projections.
- For long-term investing, low ongoing fees (e.g., Dodl, AJ Bell) can significantly boost returns.
- Accessibility Matters
- Prefer mobile-first? Check apps like Moneybox, Tembo, or Dodl.
- Prefer traditional access? Providers like Paragon or AJ Bell offer web/platform access.
- Transfers & Flexibility
- Most providers accept transfers from other LISAs—but not all allow transfers from different ISA types.
- LISAs aren’t flexible: early withdrawals often incur penalties and can’t always be repaid within the same tax year.
- Other Considerations
- Customer support, FSCS protection, and tech features all contribute to the overall user experience.
Final Thoughts
Choosing the right LISA is a balance of rate, cost, convenience, and investment style:
- Moneybox leads for short-term cash savings with slick tools.
- Tembo offers solid interest with clear fees.
- AJ Bell and Dodl cater well to investors wanting control and low costs.
- Nutmeg suits those preferring a hands-off, managed approach.
Disclaimer: We strive to keep our pricing and provider information as accurate as possible, but costs and fees may change. Please verify the latest details directly with the provider before signing up.
