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Lifetime ISAs
How they work, who they're for & all the best buys
Updated 22 June 2021
A Lifetime ISA (LISA) can be opened by anyone aged between 18 and 39. You can save up to £4,000 a year in it, towards your first home or retirement, and the state adds a cash bonus of up to £1,000 a year on top.
This guide takes you through how the accounts work, whether they're right for you, how and when you get the bonus and, of course, all the best buys.
As you need to have had a LISA open for a year to get the first-time buyer bonus, even if you're not sure you'll use it, it's worth opening one with £1 – just to get the clock ticking.
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What is a Lifetime ISA?
A Lifetime ISA (LISA) lets you save up to £4,000 every tax year towards a first home or your retirement, with the state adding a 25% bonus on top of what you save. That means you could get a chunky £1,000 of free cash annually. Plus you earn interest on whatever you save, and as it's an ISA, that interest is tax-free.
- Who can open one? Those aged 18-39 – see full info below.
- When can I use my cash and the bonus? Either when you buy your first home to use towards a deposit (see the LISA for first-time buyers). Or after you hit 60 (see the LISA for retirement). If you decide to use the LISA to help buy your first home, you can retain the account and keep saving in it for your retirement.
How the Lifetime ISA works
Here we've general need-to-knows about how Lifetime ISAs work. As well as reading these, it's also worth reading the need-to-knows about using the LISA as a first-time buyer, or using the LISA for retirement, depending on how you plan to use it.
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You get a 25% bonus each tax year on up to £4,000
You can save up to £4,000 a year in a LISA as a lump sum or by putting in cash when you can. The state will then add a 25% bonus on top. So if you save £1,000, you'll have £1,250 and if you save the full £4,000, you'll have £5,000. And that's before interest or growth.
- The bonus is paid every year you save something in to your LISA, until you hit age 50.
- The bonus is paid monthly (if you've contributed that month) and takes between four and nine weeks to arrive.
- You only get the bonus on contributions, not cash interest or investment growth.
- Once in your account the bonus is counted just like the rest of your savings, so you'll get interest on it too (or investment growth/loss).
- The maximum bonus is £33,000 if you open it at 18, and max it out until you hit 50 (unless you're born on 6 April, when the max is £32,000).
Quick question
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You must be aged 18 or over but under 40 when you open a Lifetime ISA
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Anyone aged 18 to 39 can open a LISA.
For (grand)parents wanting to help their (grand)kids buy a home, giving them cash to put in a LISA is a great way to do it – though they'll need to open the LISA account themselves as you can't do it for them.
If you're pushing 40, make sure you open one before you hit the cut-off age. You can continue to put money into the LISA until the day before your 50th birthday (once you're 50 or over you'll continue to get interest or investment growth/losses but you won't be able to pay in any more).
If you want to transfer it to a new provider, for example to get a better interest rate, this is allowed – and you can add to it then. You just can't open another for new money only.As always when there's an age limit, some will miss out. For the many people who have asked us "Isn't this age discrimination?", the answer is yes, it is. However, it is not illegal age discrimination; no more than setting a state pension age is. If it's not right for you, see our Top Savings, Top Cash ISAs and Pension Savings guides.
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Your interest (or investment growth) is tax-free in a Lifetime ISA
The Lifetime ISA is, well, an ISA – an individual savings account – which is a place to save where the interest you make is tax-free.
You can put up to £20,000 in ISAs in this tax year – and the money you put in your LISA will count towards that. So if you put £4,000 in the LISA this tax year – on top of which you'll get a 25% state bonus – you'll be able to put £16,000 into other ISAs. The bonus you get doesn't count towards the year's ISA allowance.
How the tax works depends on whether you're saving in cash or investing...
Cash LISAs
Interest is paid tax-free on the amount you contribute and on any state bonus that's already in the account when the interest is paid. You get to keep all of this interest, and the next year you'll earn interest on that too – this is known as 'compound interest'.
Also, the interest earned doesn't count towards your personal savings allowance, so there's no impact on your ability to earn £1,000 a year of interest tax-free as a basic-rate taxpayer from other savings (£500 if you're a higher-rate taxpayer).Investment LISAs
This is more complex as investment gains come in three main types: dividends, capital gains and bond interest. You might pay tax on these outside a LISA, but within a stocks & shares LISA you don't pay tax on any of them.
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You can open and contribute to a cash ISA and a Lifetime ISA in the same tax year
The overall ISA limit is £20,000 in the 2021/22 tax year. You are allowed to split this between a LISA (up to the maximum £4,000) and put the remainder in a cash ISA, stocks & shares ISA and/or an innovative finance ISA (for peer-to-peer investing) in the same tax year.
You're also allowed to hold a Help to Buy ISA and a LISA at the same time, though you can't get the first-time buyers' bonus on both (see Help to Buy ISA vs LISA info below). But you could get the Help to Buy ISA bonus for a home and then use the LISA and its bonuses for retirement.For full info on the different types of ISA available, see our Full ISA guide.
Can I transfer cash from other ISAs in to my Lifetime ISA?
If you already have an ISA, some providers let you transfer money from that into your Lifetime ISA (even if your other ISA isn't a Lifetime ISA). Even then though, you can only transfer £4,000 from other ISAs into the LISA in any one tax year (this includes Help to Buy ISAs).
As with any ISA transfer, anything you've moved from previous years' ISAs does not affect your overall current tax year's contribution.
For instance, if you transfer £4,000 into a LISA from a previous year's ISA in the 2021/22 tax year, you'd still be able to deposit £20,000 into a cash ISA, stocks & shares ISA or an innovative finance ISA (or a split between two or three of these) within the same tax year, but you'll have used up your LISA allowance for that year.
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You'll pay a penalty if you withdraw the cash and don't use it for a first home or retirement
Under the normal LISA rules, you can take some or all of your cash out of a LISA before age 60 even if you're not buying a property – but you're charged 25% of the amount withdrawn.
That penalty was cut to 20% between March 2020 and April 2021, which meant that only the bonus was taken away – putting you in a similar position to the one you were in before you got the bonus.
However, since 6 April this year, the higher penalty returned, so it's best to try to only use the LISA if you're sure the cash is for one of the two defined purposes: first-home purchase or retirement.
The rules are the same for partial and full withdrawals – here's how they work in practice...
Withdrawals completed after 5 April 2021 have a 25% penalty, equivalent to a loss of just over 6%. At first glance the fact you've had a 25% bonus added and then a 25% penalty would seem to leave you back where you started. Yet unfortunately the maths doesn't work like that...
Imagine you saved £1,000 by April 2021 and so got a £250 bonus (due in May). So you'll have £1,250 total (ignoring interest, for ease). If you withdrew it in June, and closed the account, the 25% penalty would be £312.50. So you'd get £937.50 back.
In effect, the maths means that withdrawing for reasons other than buying your first home or retirement loses you 6.25% of what you contributed.
- You don't pay the withdrawal charge if you die or are terminally ill. The LISA rules state that if you have less than 12 months to live, you retain the bonus with no penalties. If you die, any LISA money including interest and bonuses is passed on to your beneficiaries without penalty, though it'll no longer be in an ISA 'wrapper', and will form part of the estate for inheritance tax purposes.
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Once it's opened, you're not locked in – you're free to transfer it to another provider
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Once you've got the LISA open you don't have to stick with the provider you pick at the start.
As with normal ISAs, interest rates on cash LISAs will go up and down – so you'll need to keep an eye on your account, and be ready to transfer between different LISA providers to up the rate if you see a better deal.
The same is true with stocks & shares LISAs: you may decide to change your investment priorities, or seek out lower fees, in which case you'll be allowed to move it.You can hold more than one LISA at any one time, provided that you only pay in to one in each tax year (you can transfer the current year's money around, provided it's ALL transferred each time).
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In a cash LISA, your savings are protected up to £85,000 per financial institution, but with a stocks & shares LISA, the protection's more complex
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The cash LISAs we include in this guide are covered by the UK's Financial Services Compensation Scheme (FSCS), meaning you get up to £85,000 savings safety protection.
The only thing to watch is that this is by banking institution, not per account. So if you have other savings in the same place as your LISA savings, it could take you over the limit. If so, see our Savings Safety guide for more info.
If you're planning to take out a stocks & shares LISA, you have investment risk – the value of the investments you hold could go up or down. A totally different FSCS protection applies here...
Investor protection is about providers going bust, NOT you losing money
You're protected via the FSCS if you lose money due to the product provider of the investment going bust – eg, if you've a stocks & shares LISA with a bank, and the bank goes bust – not if the underlying investment goes bust.
In other words, if you've shares in a company and it goes kaput, you've no protection as that's the nature of investing.
Yet in many cases if you're buying shares or funds through a platform – eg, some just sell you shares/funds – the fact the platform went bust wouldn't actually matter. You'd still own the shares/funds, so there'd be no compensation.
In general, if you are due compensation, you'd get 100% of the first £85,000 back.
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Lifetime ISA need-to-knows for first-time buyers
If you're a first-time buyer, or think you might be in the future, you need to read these need-to-knows, as the Lifetime ISA isn't a straightforward savings account, and it won't be right for everyone. Plus, if you've come here without reading the general need-to-knows above, it's worth going back and reading those, as there's important information about how the accounts work, and the withdrawal penalties you could face if you need to get the money out.
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A first-time buyer is someone who's NEVER owned a property anywhere in the world before
If you've owned a property before – whether inside or outside the UK – you can't use a LISA towards a home purchase.
This includes owning a property (or a share of one) that you inherited, even if it was sold straightaway and you didn't live there. If you owned a company or had a trust that owned residential property that you are (or were) able to live in, you're also not considered a first-time buyer.
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You must be buying a residential UK property to live in that costs £450,000 or less
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To get the bonus you'll need to buy a property that costs £450,000 or less with any residential mortgage (so you can't be a cash buyer and the mortgage can't be a buy-to-let deal).
You can use the Lifetime ISA with other Government schemes including Right to Buy, shared ownership and Help to Buy loans. You can even use it if you're doing a self-build.
The LISA is intended to help you buy your first home, so you're not supposed to rent it out immediately after buying it (though you can if your circumstances change down the line).
You can get the money in time for exchange on your property, meaning you can use it towards the deposit requested by the person you're buying from (the exchange deposit), as well as the deposit the mortgage company will want on the property at completion. See the difference between these.If you put the money in a LISA and don't qualify to use it for a property (eg, the property you want is more than £450,000), you'll have to pay the penalty to withdraw it or you can keep it for use once you hit 60. So think seriously about whether this could happen to you first.
Quick question
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You need to have the LISA open for a year or more to be able to use it for a home
This is crucial. You need to have had the LISA open for at least 12 months to be able to use it (and the bonus) towards your first home. If you haven't started a LISA and need to buy within a year, then you'll need to save elsewhere, and won't be able to use this scheme.
It's worth bearing in mind that if you open multiple LISAs, each one needs to have been open for more than 12 months to qualify. However, there's a way around this. Simply transfer all the money into the oldest one before you buy – then it all counts.
Or you can keep the clock ticking by rolling all your LISAs into one, year after year. So if you opened a LISA in June 2020, you could transfer it to another provider in June 2021 and even though the original account would no longer exist, you'd still be able to use your LISA for a home this summer, as the transfer kept the 12-month count running.
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Wannabe first-time buyer? Even if you've no savings, open a LISA ASAP with the minimum, to start the clock
As you must have had a LISA open for a year to be able to use it for a first home, anyone with even an inkling of being a first-time buyer should open a LISA with the bare minimum (can be just £1) just to get the clock ticking – in case you want to add to it later.
If you then don't end up buying a property, or you buy one that's over £450,000 or overseas, for example, then you can just withdraw the £1 and you'll only have lost out by about 6p.
Yet if you do want to use it, even if you've just had £1 in it for a year, you can then put £4,000 in (the annual maximum) and within a month or so you'll get the bonus, so you'll then have £5,000 in it ready to put towards your deposit. -
Each person has their own LISA, so couples can have one each
If you're planning to buy a home together, it's important to understand that there's no such thing as a joint LISA: you and your partner/spouse need to open separate ones. Here's how it works:
- If you're a first-time buyer making a purchase with someone who's owned before – you can still open one and use it towards a home purchase together.
- If you're both first-time buyers buying a property together costing £450,000 or less – you can both open one and save in it, essentially doubling the bonus. Note: even if you're both using the LISA, the £450,000 limit is strict. It doesn't double because you're both using the LISA cash.
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- If you're a first-time buyer making a purchase with someone who's owned before – you can still open one and use it towards a home purchase together.
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Lifetime ISAs tend to beat Help to Buy ISAs but offer less flexibility
The Help to Buy ISA, like the LISA, has a 25% bonus that's added to what you save, if you use it towards a first home. However, it's now closed to new applicants, so this comparison is only relevant if you already have a Help to Buy ISA and are wondering which is better for you.
- You can have a Help to Buy ISA and a LISA. However, you can only use the bonus from one of them towards buying a home.
- Use the LISA for the 25% bonus to buy a home and you won't get the bonus with the Help to Buy ISA, but you can still keep and use the money plus the interest.
- Use the Help to Buy ISA for the 25% bonus and you'd have to pay a penalty to use your LISA savings for a property. Though you'd still be able to use it (and any bonuses) for retirement savings.
While the LISA allows you to save more, the Help to Buy ISA wins for some as our table shows:
Lifetime ISAs vs Help to Buy ISAs – which wins?
TABLE_CELL_STYLE LIFETIME ISA (FOR HOME PURCHASE) HELP TO BUY ISA Max contribution? £4,000/year £2,400/year (£3,400 in year one) Lump sums? Yes No, need to save monthly Max bonus? £33,000 (assumes max contribution every year from age 18-49) £3,000 (assumes max contribution over four years and eight months) When's the bonus paid? Monthly On completion when you buy a home Investment option too? Yes, via stocks & shares LISAs No. Cash savings only Max property price? £450,000 £250,000 (£450,000 in London) How quickly can you use it? After the LISA's been open 12mths Once you've £1,600+ saved (can be done in min 3mths) Who can open it? Anyone aged 18 to 39 No one. Applications closed in Dec 2019 What can it be used for? The home deposit and
mortgage depositJust the mortgage deposit Can I withdraw money if not buying a home? Yes, at age 60+; if earlier you don't get the bonus and will pay a penalty Yes, at any time, you just don't get the bonus Hopefully the table gets you there. If not, in summary...
- If you'll DEFINITELY buy a home, for less than the LISA maximum of £450,000, are aged 18 to 39, and you won't do it within a year, go for a Lifetime ISA as you will get a bigger bonus.
- If you're BUYING QUICKLY, you're 40 or over or you're not 100% sure you'll buy at all then it's safer to stick with your Help to Buy ISA.
Martin's also written a blog on this very topic, so if you're still not sure about whether to switch to a LISA, see Should I move my Help to Buy ISA into a Lifetime ISA?.
You may be able to transfer your Help to Buy ISA savings into a Lifetime ISA
You can do this if your provider allows transfers. First, use the table above to check the Lifetime ISA's the best option for you.
If it is, bear in mind that any money you transfer from your Help to Buy ISA will count towards your current year's Lifetime ISA allowance (so you won't be able to transfer more than £4,000). And you will still need to have the LISA open for a year before using it towards a property purchase.
If you have decided to transfer, ask your LISA provider for a transfer form, then provide it with the details of your Help to Buy ISA. It will do the transfer for you, and the process should take two to four weeks.
- You can have a Help to Buy ISA and a LISA. However, you can only use the bonus from one of them towards buying a home.
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Ready to buy? Ask the LISA provider to transfer money to your solictor – don't withdraw cash yourself
When you're ready to buy, ask your LISA provider to transfer the cash directly to your conveyancer/solicitor, not to you. If you do withdraw it to an account in your name, you'll pay the 25% withdrawal charge. All your savings, including the bonus, will be available to use at exchange.
Yet don't be too hasty – the property purchase needs to complete within 90 days of you sending savings from the LISA to your solicitor (see how buying a home works for likely timelines). If your purchase is going to take longer, either delay taking the money out of your LISA, or ask your solicitor/conveyancer to write to HM Revenue & Customs to get an extension on the 90-day limit.
Don't worry if your purchase ends up falling through – you won't lose out. In this case, the funds will go back to the LISA account they came from. This won't affect your annual contribution; you'll still be able to contribute up to £4,000 that tax year (unless you already have).
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Lifetime ISA need-to-knows for retirement savers
If you're planning to use the Lifetime ISA for retirement, this section tells you what you need to know to decide if it's right for you. But if you've not read the general need-to-knows above, it's worth going back and reading them, as there's important information about how the accounts work, and the withdrawal penalties you could face if you need to get the money out before you're 60.
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You can only access your LISA funds at age 60 – so you need to be in for the long haul
Even for the oldest people who can get a LISA, 60 is two decades away. The rules could be changed within that time, for good or bad – like any form of retirement savings. Here's how they stand now...
- You can access the cash on or after your 60th birthday. Then use it for whatever you like.
- You don't have to take it all at once. You can make partial withdrawals.
- If you leave it in the LISA it will still continue to get interest or investment growth/loss. The LISA doesn't simply stop at age 60; it'll still be an active product.
- You don't pay tax on the cash. All money taken out of a LISA for retirement is tax-free.
- LISA savings will affect your eligibility for benefits. Unlike a pension, which isn't counted as savings for means-tested benefits, the LISA will affect your eligibility for them. So you could have to pay to withdraw your LISA retirement savings and live off those until your savings are down below the means-testing threshold. Similarly, they count as assets in bankruptcy or divorce cases.
- You can access the cash on or after your 60th birthday. Then use it for whatever you like.
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WARNING! For most, using a pension to save for retirement is likely to be far better than a LISA
The LISA is designed as an option for saving for retirement, just like a pension. Some will see it as an alternative; others will see it as a complementary measure, as you can have both. But the two are very different beasts.
With a pension you save from gross (pre-tax) income. So, as a basic-rate taxpayer, to save £100 only costs you £80 from your pay packet, as that's all you would've received.
With a LISA you save from net (after-tax) income. So, to put £80 in costs you £80. However, if 25% is added to it, that means you've got £100.
So on the surface the amount you put in and get are pretty similar for basic-rate taxpayers. But it does get more complex than that...
Where a pension usually beats a LISA
- If you're employed, auto-enrolment means your employer has to match some of your contributions in a pension; they don't in a LISA. This is a big advantage of pensions, and one that easily trumps a LISA.
- If your employer operates 'salary sacrifice' for pension contributions, you get national insurance relief as well as tax relief.
- Higher-rate taxpayers get tax relief at 40% in a pension. So to contribute £100 only costs them £60 – easily beating a LISA.
- Saving in a pension doesn't impact your benefit entitlement; saving in a LISA does. If you became unemployed, you may need to withdraw your LISA savings (and pay the 25% withdrawal charge) before you'd be eligible to claim some means-tested benefits – leaving you nothing for retirement.
- Savings in a LISA are counted as assets in bankruptcy cases, so you could be forced to cash in early. Pensions are usually protected.
- You can currently take money from pensions from age 55 (this will rise slowly to 58); you need to be 60 to use LISA savings without penalty.
Where a LISA usually beats a pension
- When you take your pension (see how to take your pension) you can only take 25% of it as a tax-free lump sum – the rest you pay income tax on (at your marginal rate). However, withdrawals from LISAs are totally tax-free.
- Apart from with critical illness and death you can't ever take cash out of a pension early, but if you're prepared to take a 6% hit, you can withdraw money from a LISA (see how LISA withdrawals work).
- Some pensions for workers employed by the state, eg for NHS workers, can only be claimed in full at state pension age (though a reduced amount can be claimed earlier). If this applies to you, a LISA can beat a pension in terms of early access.
As a general rule though, a pension will likely beat a LISA as a first place to save for retirement funds for anyone who is employed (due to the employer's contribution) and anyone who is a higher- or top-rate taxpayer. As this is complex, here's a table which may make it easier.
Lifetime ISAs vs pensions – which wins?
TABLE_CELL_STYLE LIFETIME ISA PENSION – BASIC-RATE TAXPAYER PENSION – HIGHER-RATE TAXPAYER Employer contribution None Yes – 3%+ of salary (see auto-enrolment) Yes – 3%+ of salary (see auto-enrolment) State contribution 25% 25% (20% tax relief) 66% (40% tax relief) Max amount you can you save/yr? £4,000 £40,000 (max amount with tax relief) (1) £40,000 (max amount with tax relief) (1) When is bonus/tax relief paid? Monthly Immediately (2) 25% paid immediately, rest must be claimed (2) Who can open one? Anyone aged 18-39 Anyone aged 16+; parents can open one for you from birth Anyone aged 16+; parents can open one for you from birth When can you access it? Age 60 (accessible before for a penalty) Age 55 (rising to 57 from 2028) Age 55 (rising to 57 from 2028) Do I pay in from pre or post-tax income? Post-tax income Pre-tax income Pre-tax income What tax will I pay on withdrawal? Tax-free 25% tax-free, rest taxed at your income tax rate 25% tax-free, rest taxed at your income tax rate Liable for inheritance tax? Yes No No Affects pre-pension-age benefits entitlement? Yes No No Can be taken to pay creditors in bankruptcy? Yes No No (1) You can carry unused allowances over from previous years, meaning that technically you could contribute up to £160,000 in the 2021/22 tax year. However, you'd need to earn at least this to get this much tax relief. For a fuller explanation of the annual allowance, see pension need-to-knows. (2) Unless you contribute by salary sacrifice in which case the saving's made by paying in from pre-tax income.
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The longer you're likely to keep the LISA, the more you should consider share-type investments
The LISA gives you two savings options. The main one for first-time buyers will be cash LISAs which is where you put the money into the equivalent of a savings account, so your capital (the sum you put in) is safe and you get a defined amount of interest on top.
Yet if you're saving for retirement it's worth considering investment LISAs – where the money is invested in stocks and shares (or funds) and performance depends on how well your investments do. Here you're taking a risk that you may lose some cash in the hope that it will grow faster.Which you opt for will depend on your attitude to risk and reward, though as a rule of thumb, you should be looking to invest in shares for at least five years. This allows enough time to ride out any bumps in the stock market that might see you make a loss.
If you're saving for retirement and you've more than five or 10 years to go, the general wisdom is it's worth taking some risk at that point and looking at the higher rewards that investing in the stock market can bring – though it comes with the risk of losing money if markets (or companies you hold shares in) tank.
But, if you're a bit more cautious, you could open a cash LISA one year, and a stocks & shares LISA the next year (remember, you can hold more than one LISA at a time, you just can't usually open and pay in to more than one in the same tax year).
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Lifetime ISA Best Buys
Cash Lifetime ISAs – what we'd go for
The Moneybox LISA pays the top rate – so it's a fairly simple top pick. However, you need to open and manage the account in its app. If this isn't for you, Nottingham Building Society pays only slightly less and can be opened and managed online.
If you're looking to transfer into one of these, note that Nottingham only accepts transfers in from other Lifetime ISAs (eg, you can't transfer in a Help to Buy ISA), and will only open accounts for those aged 18-39. If you're older and looking to transfer to up the rate, Moneybox accepts transfers in from those of any age, and will also let you transfer in other types of ISA.
| Provider | Rate (AER variable) | Accepts transfers? | How to open/ manage | Interest paid | Max FSCS Protection |
| Moneybox (min £1) | 0.85% (incl 0.35% bonus for 12mths) | Yes | App (1) | Monthly
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£85,000, shared (2) |
| Nottingham BS (min £10) | 0.8% | Yes, but only if you're 18-39 | Online | Annually | £85,000 |
Top stocks & shares Lifetime ISAs
Ultimately with stocks & shares LISAs, what counts is what you choose to invest in, and there are a lot of different investment choices. We don't cover which investments are best for you, so here are the main details of some of the platforms currently offering stocks & shares LISAs.
There are two main types – those where you make your own investment decisions from a wide range, and those that will help you choose your investments.
Stocks & shares LISAs are much riskier than cash LISAs by their very nature. So there are two points to remember before going down this route:
1. IMPORTANT! If you invest, your capital is at risk. As with any investment, the value of your funds can go down as well as up, so you could lose money and get back less than you invest.
2. Always keep an eye on fees – even small fees year after year can eat into your investment.
'Do-it-yourself' Lifetime ISAs
The two LISA providers below allow you to choose from tens of thousands of investment options, from shares to funds and more. While you can opt for simple, fully-managed funds where you put your money in and investment decisions are made for you, these platforms may be more suitable for experienced investors.
If you're not sure, or overwhelmed by choice, the two 'simpler' LISAs below may be more suitable, as they come with a limited range of funds you can invest in, and tend to be fully managed as standard.
DIY stocks & shares Lifetime ISAs – our review
The two LISA providers below – AJ Bell and Hargreaves Lansdown (HL) – are both well established funds and shares platforms. Both accept transfers in (though you can just open an account if you're not transferring) and both let you to choose from 10,000+ investment options, from funds, shares, exchange traded funds, investment trusts and more.
AJ Bell has a lower basic platform fee than HL. However, which will work out cheaper will depend on how often you plan to buy or sell shares or funds. If you plan to just pick a set of funds and stick with them, AJ Bell will usually work out cheaper.
But if you plan to trade in and out of funds a lot, AJ Bell charges £1.50 each time you buy or sell a fund whereas HL doesn't charge for this at all. Their share dealing charges are similar, with HL being slightly more expensive, so have a think about your investment plans and how these charges will affect those.
Note that for both of these LISAs we've listed the basic charges you'll pay below, but there will also be charges based on the funds you pick that we can't list here.
| Provider | Min LISA deposit | Annual platform charge (funds) |
Annual platform charge (shares) | Dealing charges per trade | Transfer out fee |
|---|---|---|---|---|---|
| AJ Bell* | £500 or £25/mth | 0.25% | 0.25% (max £3.50/mth) | £1.50 (funds) £9.95 (shares) (1) |
None (2) |
| Hargreaves Lansdown* | £100 or £25/mth | 0.45% | 0.45% (max £45/yr) | £0 (funds) £11.95 (shares) (3) |
None (4) |
(1) £4.95 per trade if you made 10 or more share trades the previous month. See all AJ Bell's fees. (2) £9.95 per holding if doing an 'in-specie' transfer (where you transfer a fund holding to a new platform without selling it for cash). (3) £8.95 per trade if you made 10-19 share trades the previous month, or £5.95 if 20+. See all Hargreaves Lansdown's fees. (4) Standard dealing charges apply when you sell shares before the transfer.
Simpler Lifetime ISAs with a limited choice of funds
The two Lifetime ISAs above are for those happy to take a hands-on approach to managing their stocks & shares LISA. The LISAs below are likely to be more suitable if you want a simpler investment choice, as they tend to have limited numbers of funds designed for different risk profiles – though be aware they tend to charge higher fees than the 'DIY' options above.
Stocks & shares Lifetime ISAs with limited investment options – our review
If you're new to investing, or want someone else to do the hard work for you, these two Lifetime ISAs may suit you better. With both, you get to pick from a limited range of ready-made portfolios, and you get some help choosing between them.
Nutmeg is one of many robo-advisers, meaning you don't get to choose the exact investments your money goes into. Instead, you choose portfolios based on your attitude to risk – Nutmeg will ask you questions when you open your account and recommend a portfolio to suit the level of risk you're willing to take.
It has a choice of low-cost 'fixed-allocation' portfolios, where investments are not actively managed by humans, but are left to algorithms. Or, you can choose from its socially responsible, 'Smart Alpha' or 'fully managed' portfolios. These have higher fees, but are also 'actively managed' – so humans are making investment decisions to try and boost the portfolio's performance.
If this sounds too complex, Moneybox's stocks & shares LISA (don't get it confused with its cash LISA above) has just three investment portfolios to choose from, based on different risk levels – cautious, balanced or adventurous.
You manage the Moneybox LISA from within the app. You can also choose to link a credit or debit card to it and turn on 'round-ups' – here, your purchases are rounded up automatically to the nearest pound, with the change going into your LISA (eg, buy a £2.40 coffee and it takes 60p). Do note: it takes the round-ups as a job lot by direct debit each week, rather than taking it each time at the point of purchase.
| Provider | Min LISA deposit | Accepts transfers? | Annual platform charge (funds) |
Fund costs | Transfer out fee |
|---|---|---|---|---|---|
| Nutmeg* | £100 | No | 0.45% or 0.75% (free in year 1 via our link) |
0.14%-0.32% (1) | None (2) |
| Moneybox | £1 | Yes | £1/mth (waived for 3mths) + 0.45% | 0.12%-0.3% | None |
(1) Effect of market spread (the difference between the cost you buy and sell funds at) adds an average 0.05% cost. (2) 'In-specie' transfers cost £20 per holding.
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