A Lifetime ISA (LISA) is a government-supported savings account designed to help you buy your first home or save for later life. Alongside tax-free growth, you receive a generous 25% government bonus on your contributions — making it one of the most rewarding savings options available in the UK.
How a Lifetime ISA Works
Here are the key rules and benefits of a LISA:
- Eligibility: Available to UK residents aged 18–39.
- Contribution limit: Save up to £4,000 per tax year.
- Government bonus: Receive an extra 25% bonus on what you contribute — up to £1,000 each year.
- Tax benefits: Both your savings and any growth are tax-free.
Types of LISAs
There are two main types of Lifetime ISAs, depending on how you want your savings to grow:
1. Cash Lifetime ISA
Works like a standard savings account, earning tax-free interest. This is a lower-risk option, ideal for shorter timeframes or those wanting guaranteed returns.
2. Stocks & Shares Lifetime ISA
Your money is invested in funds, shares, or bonds, offering the potential for higher returns over the long term — but with greater risk. Best for those with longer saving horizons and comfort with investment risk.
How You Can Use a Lifetime ISA
Your Lifetime ISA savings can be used in two main ways:
- Buying your first home: Withdraw funds tax-free to purchase a property worth up to £450,000 anywhere in the UK.
- Retirement savings: Access your money tax-free from age 60, making it a flexible tool for later-life planning.
Early withdrawal: If you take money out for any other reason, you’ll face a 25% penalty, meaning you’ll lose not just the government bonus but part of your original savings too.
Alternatives to a Lifetime ISA
If a LISA isn’t right for you, there are other options to consider:
Help to Buy ISA (closed to new applicants but still usable)
If you opened one before 30 November 2019, you can keep saving until 2029 and claim your 25% bonus by 2030. However, the bonus is capped at £3,000 and the property limit is £250,000 (£450,000 in London).
Regular ISA (Cash or Stocks & Shares)
A flexible savings or investment option with a higher annual allowance of £20,000. However, there’s no government bonus.
Workplace or Personal Pension
For retirement planning, pensions often provide higher tax relief and potential employer contributions, making them an excellent primary option before considering a LISA.
LISA vs. Other Options: Comparison Table
| Feature | Lifetime ISA | Help to Buy ISA | Regular ISA | Pension |
|---|---|---|---|---|
| Government Bonus | 25% up to £1,000/year | 25% up to £3,000 total | None | Tax relief (20%+ depending on tax bracket) |
| Annual Limit | £4,000 | £2,400 (£3,600 in first year) | £20,000 | Up to £60,000 (2025/26) or 100% of earnings |
| Use for First Home | Yes, up to £450,000 | Yes, up to £250,000 (£450,000 in London) | No | No |
| Use for Retirement | Yes, from age 60 | No | Yes (no bonus) | Yes (from 55–57 depending on rules) |
| Early Withdrawal Penalty | 25% | None (but lose bonus if not used for a home) | None | Tax penalties if withdrawn early |
| Risk Level | Low (cash) to high (stocks & shares) | Low | Low to high | Varies with investment choices |
Is a Lifetime ISA Right for You?
A LISA could be a perfect fit if:
- You’re a first-time buyer wanting to grow your deposit faster.
- You want to boost your retirement savings, especially if you’re already contributing to a pension.
- You’re looking for a tax-efficient savings account that rewards consistent contributions.
Key Takeaways
- Compare with other products like pensions or ISAs to ensure it fits your goals.
- Save up to £4,000 a year and receive a £1,000 annual bonus.
- Choose cash for safety or stocks & shares for growth.
- Ideal for first homes or as a retirement supplement.
Lifetime ISA Providers and How to Sign Up
Popular LISA Providers
Here are some of the most widely-used providers offering Lifetime ISAs in the UK:
- Moneybox – The largest LISA provider, app-based, offering both Cash and Stocks & Shares options with features like round-up savings and socially responsible portfolios
- AJ Bell / AJ Bell Dodl – A reputable investment platform with low fees, offering both Stocks & Shares LISA (via AJ Bell) and a simplified app version (Dodl)
- Hargreaves Lansdown – The UK’s biggest investment platform, offering extensive fund and share options, with tiered fees and strong customer support
- Tembo (formerly Nude) and Plum – Emerging app-first options with competitive rates and simple access via mobile, ideal for beginners
- Foresters Friendly Society, EQi, Paragon Bank, Skipton BS, Newcastle BS, OneFamily, Nottingham BS – Other active providers, each with its unique strengths, whether in cash rates, fees, or user experience
Choosing the Right Provider
Here’s a quick breakdown to help you narrow your choice:
- App-based simplicity & beginner tools: Moneybox, Plum, Tembo
- Low fees & good fund selection: AJ Bell Dodl, Hargreaves Lansdown
- Ethical investing focus: Moneybox (ESG portfolios), AJ Bell (sustainable funds)
- Competitive cash rates: Plum, Tembo, Skipton, Paragon, Newcastle (see comparison table)
Find out more on our Comparison of best LISA providers in UK page.
How to Open a LISA
- Check eligibility: Must be a UK resident aged 18–39, make first payment before 40, and can contribute until age 50
- Pick your provider: Compare based on investment style, app experience, fees, and interest rates.
- Apply online: Most providers offer quick app or web-based sign-up (AJ Bell, Moneybox, Plum, Tembo). Others allow online, by post, or phone (e.g. Skipton)
- Provide required details: Typically includes ID verification (passport/driving licence), proof of address, and National Insurance number
- Start contributing: Set up direct debits, lump sums, or round-up features, depending on provider.
- Claim your bonus: The provider claims the government bonus monthly or annually on your behalf
