
Lifetime ISAs
How they work, who they're for & all the best buys
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.
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What is a Lifetime ISA?
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.
General need-to-knows for all
Lifetime ISA need-to-knows specifically for first-time buyers
Lifetime ISA need-to-knows specifically for retirement savers
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Lifetime ISA Best Buys
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)
Good cash LISA rate but only accepts transfers in from other LISAs
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).
Interest rate: 0.8% AER variable
Interest paid: Annually
Min pay-in: £10 | Max pay-in: £4,000/yr
How to open/access: Online
Allows transfers? Only from other LISAs and only if you're aged 18-39
FSCS protection: Full £85,000 UK savings safety guarantee
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.
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.
Lifetime ISAs with a wide range of investment choices
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.
Choose your own investments or pick a ready-made portfolio. Lower base fees than Hargreaves Lansdown below
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
Similarly huge choice of investments as AJ Bell, though slightly higher base fees
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)
Simpler Lifetime ISAs with a limited choice of funds
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).
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