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28 January 2021
The Lifetime ISA (LISA) lets you save up to £4,000 a year towards your first home or retirement, and gives you 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.
The 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.
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 rules say you can only save up to £4,000 a year in a LISA. But you could still open a cash ISA, stocks & shares ISA and/or innovative finance ISA for the remainder of your tax-free allowance (or even split savings between all three).
In 2020/21 the ISA allowance is £20,000, meaning you could save whatever is left after your LISA contributions up to that limit. For example, if you save the maximum £4,000 in the LISA, you've still got £16,000 worth of allowance to use up in one or more of the other types of ISA.
You need to be living in the UK when you open the account and pay in to it (unless you're a crown employee on an overseas posting, or the spouse/civil partner of one). It doesn't matter if you're a UK citizen or not.
If you then move abroad, you'll need to stop paying into the LISA – unless you're a crown employee.
If you emigrate permanently from the UK, the normal withdrawal rules apply. You'll need to use the funds for a UK residential property (not buy to let, so this will be difficult), wait until you're 60 and withdraw it then, or pay a 25% penalty to access the cash early.
Yes they can. However, it's unlikely that if you've saved in it and had the bonus that it will be taken off you. What is more plausible is that a future Government decides it will stop paying bonuses, or will change the withdrawal penalties or amounts that you can pay in, or it could add extra things you can get a bonus for.
So you should be pretty confident that, if you're putting money in to get the bonus for use on a home or retirement, you'll actually get it. And if the bonus is stopped, just stop putting money in.
The Lifetime ISA is, well, an ISA – an individual savings account – which is a place to save where the taxman can't get his hands on the interest you make.
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 only be able to put £16,000 in 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 or investing...
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 it 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 higher rate).
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.
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.
If you're pushing 40, make sure you open one before you hit the cut-off age. Once you're over 40, you can continue to put money into the LISA until the day before your 50th birthday.
And, if you want to transfer it to a new provider, for example to get a better interest rate, this is allowed – and then you can add to it. 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've 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.
You can give money to children who are 18 or over to put in a LISA, but they will need to open the LISA themselves.
Many worry about the tax implications of giving money. But gifts aren't taxable; you can give money to anyone you choose (as long as it is a genuine gift and not in lieu of some service). The only caveat is if you die within seven years there can be inheritance tax on it.
No. The regulations say you can't contribute into a LISA once you hit 50. So between ages 50 and 60 you'll still be able to earn interest on the amounts you've saved before you were 50 (similarly, if it's invested, you'll benefit from any investment growth) but you can't put any more in.
You'll also be able to transfer the money between different LISA providers to boost returns, whether it's saved or invested. However, unless you use the funds to buy your first home, you won't be able to access the money in your LISA for retirement income until you're 60 (unless you forfeit all the bonus payments accrued on that cash and pay a penalty on top).
Lifetime ISA holders who withdraw money from their account will essentially face no penalty until next April, after the Government announced changes to its rules. Previously, you were charged 25% of the amount withdrawn if you took cash out before you turned 60 or if you were not buying a property.
That's now been cut to 20% between 6 March 2020 and 5 April 2021, so while there's still a penalty, in effect this means that the bonus you get is taken away – so you'll end up in a similar position to the one you were in before you got the bonus. For a cash Lifetime ISA you'll get back the amount you put in, plus some interest. For a stocks & shares LISA, it'll depend on how your investments have done.
Anyone who has withdrawn their money since 6 March 2020 and paid a 25% charge will have the difference refunded.
Here's how it'll work in practice...
Withdrawals 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 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.
The way the maths works out is 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.
Yes, you just pay a penalty of 25% of the amount withdrawn. An example may help...
Imagine you saved £4,000 in the 2019/20 tax year, and got a £1,000 bonus on it in May 2019. Then, in December 2019, you want £1,000 back from the account.
To get £1,000 in your hand, tell your ISA provider this is what you want. It'll pay the cash out, but it will also pay the withdrawal penalty to HM Revenue & Customs. In our example, you end up with £1,000, but your balance is reduced by £1,250, leaving £3,750 (plus any interest) in the account.
When you die, if you're married or in a civil partnership your partner gets a one-off increase in their (normal, not Lifetime) ISA allowance equivalent to what you had in all ISAs combined (including LISAs). They get this whether or not you leave the ISA money to them.
If you're not married or in a civil partnership, the allowance doesn't pass to anyone.
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 will go up and down – you'll need to keep an eye on it, 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, 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).
The overall ISA limit is £20,000 in the 2020/21 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.
Yes, if the provider allows it. 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 2020/21 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.
If you've owned 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.
Yes. At the moment, you are a first-time buyer as the person leaving the property to you is still alive.
However, if the worst were to happen, and they died before you had used the LISA savings for your first property purchase, then you wouldn't be able to put the LISA savings towards the property purchase without paying the 25% withdrawal charge, as you wouldn't be a first-time buyer at that point – you'd have owned a property.
In effect, you'd need to keep the cash in the LISA until you were 60 and could withdraw penalty-free, or you'd need to be prepared that you may get less back than you put in.
You probably still count as a first-time buyer, as it's likely that the schemes you're investing in don't allow you the right to live in or occupy the properties you're investing in.
To get the bonus you'll just need to buy a property that costs £450,000 or less with any residential mortgage (not buy to let). That includes Right to Buy, shared ownership, self-builds, and Help to Buy loans. The LISA is intended to help you buy your first home, so you're not supposed to rent it out. For exact rules, see Martin's 'Can I rent my property?' blog.
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.
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 are buying off (the exchange deposit), as well as the deposit the mortgage company will want on the property at completion. See the difference between these.
When buying, 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 funds, including the bonus, will be available to use at exchange, provided the bonus has been paid in time.
The purchase needs to complete within 90 days of withdrawing your savings from the LISA. See how buying a home works.
If your purchase is going to take longer, delay taking the money out of your LISA, or ask your solicitor/conveyancer to write to HM Revenue & Customs to get an extension.
If your property purchase completes before you get the bonus (which can take four to nine weeks to arrive in your account) then you'll have to pay the 25% withdrawal charge to access the money.
Don't worry, you won't lose out. In this case, the funds 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).
No, the only criteria is that you buy with a residential mortgage (so not buy to let). However, if you could be a cash buyer, and are just getting a mortgage to be able to use the LISA, do the maths to make sure it's worth it.
Most lenders have a minimum lending amount, often £20,000 or £25,000, so you'd need to borrow that much. You'd also need to pay for a lender's valuation and legal work when purchasing the property, and the mortgage you get may have early repayment penalties if you plan to pay off the entirety of the mortgage in the first months of it.
If you plan to do this, always ensure that the amount you get from the state bonus is more than the mortgage will add to your purchasing costs over being a cash buyer.
If you're lucky enough to be buying your first property with cash, you'll pay the withdrawal charge to access your LISA savings (unless you're over 60) as you need to be buying with a mortgage to use the LISA and bonus.
Yes. You'll be able to put LISA savings, including the bonus, towards the purchase of the land for a self-build property, provided you still meet the other criteria (ie, the land's in the UK, you're buying it with a mortgage, it costs £450,000 or less and you complete within 90 days of withdrawal; further, that the home you intend to build is your first home and you intend to live in it).
The Treasury advises that if you're in any doubt about whether a LISA can be used, your solicitor should be able to help.
Yes, provided you still meet the other criteria. However, you won't be able to use it towards the deposit the auction house requires upfront.
If it's just you wanting to 'staircase up' the amount you own, you can't use a LISA as you already own a share of a property.
Yet if you have a partner who's a first-time buyer, and meets all the other requirements above, they will be able to use the LISA and bonus to help you staircase up. Note that your partner will need to be named on the title deeds of the property to show they have used their LISA and bonus towards the purchase.
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. To make it plain:
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 2018, you could transfer it to another provider in June 2019 and even though the original account would no longer exist, you'd still be able to use your LISA for a home, as the transfer kept the 12-month count running.
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.
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.
While the LISA allows you to save more, the Help to Buy ISA wins for some as our table shows:
|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||Any first-time buyer aged 16+|
|What can it be used for?||The home deposit and
|Just 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 or you're not 100% sure you'll buy at all then it's safer to stick with your Help to Buy ISA.
You can, if your provider allows transfers.
Use the table above to check the Lifetime ISA's the best option for you. But it's worth knowing that any money you transfer 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.
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...
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
Where a LISA usually beats a pension
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.
|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||Age 55|
|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 2020/21 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.
A little aside...
Not to do with your choice, but it's worth taking a look at the cleverness behind this from the Treasury. If people use a LISA rather than a pension, the Treasury gets tax revenue now, as savings come from taxed income. If people put it in a pension, the Treasury has to wait years to get tax. So this could be the current Chancellor grabbing cash out of future Chancellors' pockets.
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 also 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).
With cash LISAs, the only risk is the slight one of the bank or building society going bust, though you get up to £85,000 protection from the Financial Services Compensation Scheme (FSCS).
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've 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
The FSCS investment protection applies 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 company – eg, some stockbrokers just sell you shares – the fact the stockbroker went bust wouldn't actually matter. You'd still own the shares, so there'd be no compensation.
In general, if you are due compensation, you'd get 100% of the first £85,000 back.
The Moneybox cash Lifetime ISA pays newbies 0.85% interest, including a fixed 0.35% bonus in the first year. While the fixed bonus provides a bit of rate certainty, it also means your rate is likely to drop after the first year – so diarise to check if it's worth switching when your bonus expires.
Note: You need to open and manage the account in Moneybox's app – if this isn't for you, consider the Nottingham Building Society LISA below.
Interest rate: 0.85% AER variable, including fixed 0.35% bonus for newbies in year one
Interest paid: Monthly
Min pay-in: £1 | Max pay-in: £4,000/yr
How to open/access: Via app for iOS (rated 4.7/5) or Android (rated 4.8/5)
Accepts transfers? Yes, from most providers, with no age limit (but non-LISA transfers in will eat up your LISA allowance)
FSCS protection: Up to £85,000 UK savings safety guarantee, shared with Santander (more info)
Nottingham Building Society's cash LISA pays 0.8% AER variable interest. You can open it online with £10.
You can also transfer your existing LISA to it if you're aged 18-39. However, it doesn't accept transfers in from any other kind of ISA (eg, you can't transfer in a Help to Buy ISA or stocks and shares ISA).
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.
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. Because even small fees year after year can eat into your investment.
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 further 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.
AJ Bell* is a major investment provider, and it's been a top pick for its stocks & shares ISA for a while. AJ Bell's LISA allows experienced investors to pick from shares, ETFs, funds and more.
If you're less experienced, you can go for one of its ready-made portfolios, from cautious to adventurous. Or you could try exchange-traded funds (ETFs) which track a chosen index, eg, the FTSE 100, where the fund manager aims to mirror the performance of that index.
One thing to watch out for is that this LISA could have high transfer fees. It charges a £9.95 fee per holding to transfer to a new provider – fine if you're in one fund, but potentially expensive if you've several different funds or share holdings – though if you're happy to cash in before you transfer, there's no fee.
What can I invest in? Thousands of different investment choices, including shares, funds, investment trusts, bonds and exchange-traded funds
Min investment: £500 lump sum or £25/mth | Max investment: £4,000/yr
Annual fees: 0.25% as a base, though it depends what you invest in. See all charges
Allows transfers? Yes, though non-LISA transfers in will eat up your LISA allowance
Exit/transfer fees: None if transferred out as cash, otherwise £9.95 per holding transferred out
Hargreaves Lansdown* is a major investment provider, and popular with investors for its large range of choices – including more than 2,500 different funds. With Hargreaves, you can be as involved as you want, from choosing your own shares and funds and building a portfolio, to opting for single funds where the fund manager chooses the investments.
Unusually, there are no extra fees to transfer stock or cash out to another provider (though if the transfer involves sales of shares, these will be subject to Hargreaves' standard dealing charges).
What can I invest in? Thousands of investment choices, including 2,500 funds, shares, investment trusts and exchange-traded funds
Min investment: £100 lump sum or £25/mth | Max investment: £4,000/yr
Annual fees: 0.45% as a base, though it depends what you invest in. See all charges
Allows transfers? From non-LISAs, though transfers in will eat up your LISA allowance
Exit/transfer fees: None (standard dealing charges apply if shares sold as part of transfer)
The two Lifetime ISAs above tend to be more for those confident in choosing their own funds, and happy to take a more hands-on approach to managing their stocks & shares LISA. The LISAs below are likely to be more suitable if you want a more simple investment choice, as they tend to have limited numbers of funds, designed for different risk profiles.
If you're a new Nutmeg* customer and you apply via our link, you'll pay no platform fees for the first year. Nutmeg's a robo-investor, 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 or portfolios to suit the level of risk you're willing to take.
This means you can't pick and choose what funds you want in your portfolio, though it is an easy route. If you're looking for low risk, Nutmeg says 'portfolio one' carries its lowest risk, being made up largely of bonds, rather than equities which are a lot riskier.
What can I invest in? Choice of 10 fully managed portfolios, socially responsible portfolios, or five 'fixed-allocation' portfolios
Min investment: £100 lump sum | Max investment: £4,000/yr
Annual fees (after year one): Fully managed or 'socially responsible' portfolio: £0-£100k at 0.75%, fixed portfolio: £0-£100k at 0.45%
Investment fund costs (average): 0.17%-0.31% depending on portfolio
Effect of market spread cost (average): 0.07%
Allows transfers? No
Exit/transfer fee: None, though charges £20 per holding for 'in specie' transfers (where you transfer a fund/holding directly to a new provider without cashing it in first).
As well as offering a cash LISA, the Moneybox app offers a stocks & shares LISA which lets you invest from as little as £1. You can make weekly or one-off deposits based on one of three investment options – cautious, balanced or adventurous.
There's also a feature called round-ups, where you connect your debit or credit card to it and it automatically rounds up your purchases to the nearest pound, investing the difference (eg, buy a £2.20 coffee and it takes 80p to invest). Any savings you make are taken once a week via direct debit and invested a few days later.
If you're looking for low risk, as its name suggests, the 'cautious' portfolio carries the lowest risk, containing more cash rather than shares.
What can I invest in? Choice of three investment options – cautious, balanced or adventurous
Min investment: £1 | Max investment: £4,000/yr
Annual fees: £1/mth (free for the first three months) + 0.45% a year. Fund manager charges: 0.12%-0.3%
Allows transfers? Yes, though non-LISA transfers in will eat up your LISA allowance
Exit/transfer fees: None, though charges £25 per holding for 'in specie' transfers (where you transfer a fund/holding directly to a new provider without cashing it in first).
Clever ways to calculate your finances