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Top Lifetime ISAs (LISAs)

How they work, who they're for and which provider pays the most

Benjamin Taylor
Benjamin Taylor | Edited by Chris Collier
Updated 3 December 2024

A Lifetime ISA (LISA) can be opened by anyone aged between 18 and 39. You can use one to save up to £4,000 a year, towards either a first home costing up to £450,000 or for retirement, with the state adding a bonus of up to £1,000 a year on top. This guide takes you through how LISAs work, whether they're right for you, how you get the bonus and the best buys.

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Top-pick Lifetime ISAs

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 (Individual Savings Account), that interest is tax-free.

  • Who can open one? Those aged 18-39 – 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 LISA for first-time buyers). Or after you hit 60 (see LISA for retirement). If you use a LISA to help buy your first home, you can retain the account and keep saving in it for your retirement.

  • How long do I need to have a LISA? You must have had a LISA for a year to be able to use it (and the government bonus) towards your first home.

Lifetime ISAs are complex products, so it's worth spending time reading our below need-to-knows in full before deciding if it's the right choice for you.

How a 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.

  • 1. 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).

  • 2. You must be aged 18 or over but under 40 when you open a Lifetime ISA

    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.

  • 3. Your interest (or investment growth) is tax-free in a Lifetime ISA

    The Lifetime ISA is, well, an ISA – an individual savings banking 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.

  • 4. 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 2024/25 tax year. You are allowed to split this between one LISA (up to the maximum £4,000) and put the remainder in  cash ISAs,  stocks & shares ISAs and/or innovative finance ISAs (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 2024/25 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 £4,000 LISA allowance for 2024/25.

  • 5. 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, 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: buying a first-home costing £450,000 or less, or retirement.

    The rules are the same for partial and full withdrawals – here's how they work in practice...

    • Withdrawals 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 and so got a £250 bonus, you'll have £1,250 total (ignoring interest, for ease). If you then withdrew it 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.

  • 6. Once it's opened, you're not locked in – you're free to transfer it to another provider

    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 only open and subscribe to one LISA per tax year. If you want to transfer your current year's subscription you must transfer it in full. 

    However, many providers only accept transfers if you're aged 18 to 39 – options can be limited if you're 40 or older. Although interest rates on LISAs are variable – and so can change at any time – watch out for rates which include fixed-term bonuses, as the rate falls (often considerably) after the bonus period ends. It may be worth avoiding these if you're approaching 40 – so that you're not locked in at the lower rate once the bonus period ends.

  • 7. 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

    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 – for example, 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 – for instance, 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 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.

  • 1. 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.

  • 2. You must be buying a residential UK property to live in that costs £450,000 or less

    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).

    While this will be enough for most, some buying in expensive areas have fallen foul of this rule. MoneySavingExpert has called for reform to this threshold to allow those who end up buying a property costing more than the maximum property price to get their money out of a LISA without penalty, and in the longer term to raise this maximum property price in line with house price inflation.

    But, if you don't yet have a LISA, don't count on any changes - make sure it's right for you BEFORE opening an account.

    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.

    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.

    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).

    Quick Questions

    • Can I use an ISA for a self-build property?

      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 (for instance, 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, and 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.

    • Can I use the LISA to 'staircase up' if I have a shared ownership property?

      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.

    • Is there a minimum mortgage amount to be able to use the LISA?

      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.

  • 3. You need to have opened your first LISA for a year or more to be able to use it for a home

    You need to have held a LISA for at least 12 months to be able to use it (and the bonus) towards your first home WITHOUT paying a penalty – use it before and you'll pay a withdrawal charge, which wipes out the bonus and a bit more on top.

    You're free to transfer an existing LISA elsewhere at any point (for example, to get a higher interest rate) – it'll be the same LISA, just with a different provider, so the clock doesn't reset. For example, open a brand new LISA and switch it after six months and you'll only have to wait another six months before being able to use it penalty-free.

    It's also possible to open new LISAs alongside existing ones IF they're opened in different tax years – but while it's possible to hold multiple LISAs, you can only pay in to one LISA each tax year. If you've multiple LISAs, you can withdraw from each of them penalty-free when you purchase your first-time property, providing that each LISA has been open for at least a year. You can also transfer them all into one LISA if you wish. 

    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.

  • 4. Wannabe first-time buyer? Even if you've no savings, you can open a LISA with £1 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, most people 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, you can 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.

  • 5. 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, but the partner who's previously owned a property can't open one.

    • 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

  • 6. Got a Help to Buy ISA? You can transfer it to a Lifetime ISA, but you'll need to time it right to make it work

    The Help to Buy ISA (H2B ISA) is closed to new applicants, but also has a 25% bonus if you use the savings towards a first home. If you already have one, you can open a LISA as well (if you're aged 18 to 39), however you can only use the bonus from one of them towards buying a home.

    So, unless you want to use the LISA and its bonus for retirement savings, the main decision is whether or not to keep the H2B ISA, or transfer it to a LISA. See Martin's Should I move my Help to Buy ISA into a Lifetime ISA?, or read on for a summary.

    For simplicity, there are three main benefits of using a LISA over a H2B ISA:

    • You can save up to £4,000/year in a LISA, versus £2,400/year in a H2B ISA. So you'll be able to save and earn the bonus quicker with a LISA. 

    • You'll earn a larger bonus if you're able to save over £12,000. The maximum bonus you can get with a H2B is £3,000 (so £12,000 saved) whereas the LISA doesn't have this cap (the maximum bonus is £33,000 if you saved £4,000/year from age 18 to 49). 

    • You can buy a home up to £450,000 anywhere in the UK. The H2B ISA can be used for a property costing up to £250,000, or £450,000 in London. The LISA has a flat £450,000 anywhere.

    But there are also three potential drawbacks to making the switch from your H2B ISA: 

    • A LISA has to be open at least a year to use it for a first home. So if you've not yet opened one and know you'll buy within a year, stick where you are.

    • You'll pay a penalty to withdraw cash from a LISA, unless used for your first home or retirement. Unlike the H2B ISA, where you can withdraw your cash whenever you like (without the bonus), the LISA charges a penalty of 25%, so you'll lose around 6% of what you've put in. So if you're not sure you'll buy at all, a H2B ISA is safer.  

    • If you have more than £4,000 saved in a H2B ISA, you'll need to wait until a new tax year(s) to transfer it all. Money you transfer from a H2B ISA to a LISA still counts towards the £4,000 LISA allowance each tax year, so if you've more than that saved, you'll need to wait until after 6 April (that is, the start of the next tax year) to move another £4,000. 

      For example, if you had £12,000 saved in a H2B ISA, it would take you three tax years to move it all to a LISA (so at least a year and two days), for you to be back in the same position as you are now. 

      This timing is important as, if you decide to buy whilst you've got cash in both, you'll essentially be sacrificing the bonus on one pot of money. So if you're going to transfer, make sure you have ample time before you're planning to buy to move your cash. If you don't, again, it's best to stick with the Help to Buy ISA.

    Below is our full LISA vs H2B ISA comparison...

    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 deposit    		 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

    How to transfer your Help to Buy ISA savings into a Lifetime ISA

    If a LISA wins for you, you just need to open one (see the top payers) and move the money across. You can only transfer up to £4,000 this tax year (less if you've already paid in to the LISA) as any money transferred from a H2B ISA to a LISA counts towards the allowance. Here's how to transfer the money:

    • If the LISA provider allows transfers from a H2B, fill in its transfer form as you apply. This then won't reduce your overall £20,000 ISA limit. The transfer should take two to four weeks.

    • If it doesn't accept transfers, you'll have to just withdraw the money. You should be able to find a top payer that accepts transfers in, but if you can't or want to go with a provider that doesn't, you'll have to just withdraw the cash from the Help to Buy ISA and pay it in to the LISA.

      This will mean your overall £20,000 ISA limit is reduced for the tax-year in which you make the deposit, though if you're unlikely to use this anyway, it's not a huge deal. 

    If you have more than £4,000 in your H2B ISA, you'll need to move £4,000 now and then ask to transfer the rest when the next tax year starts. Some H2B ISAs may close your account when you transfer some of the money out, in which case you'll need to close it down, take the money out and save it elsewhere (see top savings) until you can put it in a LISA.

  • 7. Ready to buy? Ask the LISA provider to transfer money to your solicitor – 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. 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.

  • 1. 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.

  • 2. 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 affect 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, for example, 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 £60,000 (max amount with tax relief) (1) £60,000 (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 £180,000 in the 2024/25 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.

  • 3. 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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Top-pick Lifetime ISAs

Below are the top cash Lifetime ISAs, as well as some stocks & shares Lifetime ISAs to try.

Cash Lifetime ISAs – what we'd go for

Moneybox's 4.8% LISA pays the top rate, though it can only be opened and managed via its mobile app and the rate also drops to 3.8% after 12 months (min £1). You can transfer in to this LISA from other LISAs, though only if you've not held a Moneybox LISA in the past.

Tembo is predominantly a mortgage broker, though it acquired the Lifetime ISA provider Nude (which we occasionally featured in this guide) and now offers its own Lifetime ISA at a decent 4.75% interest rate, which can be opened via app with just £1. New customers who open its Lifetime ISA and initiate a transfer in of £5,000+ by 23:59pm on Mon 2 Dec will also get £100 cashback (click 'Get started' on the green banner at the top of its website for full info).

If you'd prefer an online account where you can transfer in from another LISA, Paragon Bank is the top-payer at 3.51%. If you want to transfer in from any type of ISA, Skipton BS offers the top rate of 2.8%. 

Provider Rate (AER variable) Accepts transfer in from other types of ISA? How to open/ manage Interest paid Max FSCS Protection
Top Lifetime ISAs. Here are the highest paying fee-free Cash Lifetime ISAs for new customers.
Moneybox 
(min £1)		 4.8%
(rate includes 1% fixed 1yr bonus)		 Yes (only if you've not had a Moneybox LISA before) App Monthly (1) £85,000 (shared with various banks)

Tembo

(min £1)

 4.75% Yes (only from existing LISAs) App Monthly £85,000 (shared with various banks)

Bath BS

(min £1)

 3.69% No Online/ branch Annually £85,000
Paragon Bank
(min £1)		 3.51% Yes (only from existing LISAs) Online Annually £85,000

Nottingham BS

(min £1)

 3% Yes (only from existing LISAs) Online Annually

£85,000

 

Newcastle BS

(min £1)

 2.85% Yes (only from existing LISAs) Online Annually £85,000

Skipton BS

(min £1)

 2.8% Yes Online Annually £85,000

(1) Monthly interest rate is only 3.8%, you are paid the additional 1% on the first day of the 13th month. 

Stocks & shares Lifetime ISAs to try

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.


Investing isn't MoneySavingExpert's area of expertise - we're not financial advisors. So we don't tell you here what the 'best' stocks & shares Lifetime ISA platform for you is, or give you any top picks. What we've done is pull out some of the more well-known platforms so you have somewhere to start your own research.

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.

'Do-it-yourself' Lifetime ISAs

The three 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 by a financial advisor, 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 LISA platforms

Platform + min deposit Management fee Fee to buy/sell funds Fee to buy/sell shares (1) How to manage
Dodl* (min £100 or £25/month) 0.15% per year (min £1/mth) None None App
AJ Bell* (min £500 or £25/month) 0.25% per year (£3.50/mth max for shares) £1.50 £5 Online/ app
Hargreaves Lansdown* (min £100 or £25/month) 0.25% per year (£45/yr max for shares) None £11.95 Online/ app

(1) Fees based on up to 10 trades of UK shares per month, both providers offer discounted rates for more frequent trades. You can trade overseas shares but expect to pay a currency exchange fee of up to 1%.

Simpler Lifetime ISAs with a limited choice of funds

The three 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.

Simpler LISA platforms

Platform + min deposit Management fee Average fund costs (incl. market spread) How to manage
Nutmeg* (min £100) 0.45% to 0.75% per year
(no management fee in first year via our link)		 0.21% to 0.36% per year Online/ app
Moneybox (min £1) 0.45% per year + £1/mth
 0.08% to 0.74% per year App

Last updated: 24 September 2024.

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