Understanding the Lifetime ISA
The Lifetime ISA (LISA) is a savings and investment account for adults aged 18-39. You can contribute up to £4,000 per tax year, and the government adds a 25% bonus (up to £1,000 per year). Funds can be used to buy your first home (up to £450,000) or withdrawn after age 60 tax-free.
The 25% Government Bonus
The government adds 25p for every £1 you save, up to £1,000 per year. The bonus is paid monthly (within 4-9 weeks of each contribution). Over a full contribution lifetime from age 18 to 50, you could receive up to £32,000 in government bonuses alone, before any investment returns.
Early Withdrawal Penalty
Withdrawing funds for anything other than a qualifying first home purchase or after age 60 incurs a 25% withdrawal charge. This effectively means you lose the government bonus plus 6.25% of your own contributions. For this reason, only save into a LISA if you are confident you will use it for a first home or retirement.
Frequently Asked Questions
Can I have a LISA and a Help to Buy ISA?â–¾
You can hold both, but you can only use the government bonus from one of them towards your first home purchase. The Help to Buy ISA closed to new applicants in November 2019, but existing holders can continue to save. The LISA generally offers a higher bonus potential for most savers.
Does the LISA count towards my ISA allowance?â–¾
Yes. The £4,000 LISA limit counts towards your overall £20,000 annual ISA allowance. So if you contribute £4,000 to a LISA, you can put up to £16,000 into other ISAs (Cash ISA, Stocks and Shares ISA, or Innovative Finance ISA) in the same tax year.
Should I choose a Cash LISA or Stocks and Shares LISA?â–¾
If you plan to buy a home within 5 years, a Cash LISA is safer as your capital is protected. For longer-term savings (especially retirement at 60), a Stocks and Shares LISA has historically delivered better returns, though your investment value can go down as well as up.
What is the property price limit for using a LISA?â–¾
You can use your LISA to buy a first home costing up to £450,000. The property must be purchased with a mortgage and you must be a first-time buyer. If you buy jointly, both buyers must be first-time buyers, but only one needs to hold a LISA.
Calclypso Editorial Team
LISA rules verified against HMRC guidance. Last updated: April 2026. This calculator is for illustration purposes. Investment returns are not guaranteed.