Lifetime ISA
Calculator UK 2026

The Lifetime ISA was introduced in April 2017. It is a tax-free savings or investment account for UK residents aged 18-39, designed for first-home purchase or retirement (age 60+). The government adds a 25% bonus on contributions, up to £1,000 per tax year. Annual contribution limit is £4,000 (which counts toward the overall £20,000 ISA allowance). Account stays open until age 50, after which no further contributions or bonuses can be added but the existing balance continues to grow tax-free.

You must be a UK resident, aged 18-39 inclusive, and have a valid National Insurance number. Once opened before age 40, you can keep contributing until age 50 (provided you remain a UK resident or qualifying overseas Crown employee). Each individual can only open one LISA per tax year, but you can hold multiple LISAs and transfer between them. Joint accounts are not allowed.

HMRC pays a 25% bonus on your contributions, up to £1,000 maximum per tax year (which represents £4,000 contributed). The bonus is paid monthly into your LISA account, typically 4-9 weeks after each contribution. The bonus then earns investment returns alongside your own contributions. Across the maximum 32 contribution years (age 18-50), the maximum government top-up is £32,000 — before any investment growth on the bonus itself.

Two qualifying uses without penalty: (1) First-home purchase — first-time buyer purchasing a UK residential property up to £450,000, with a mortgage from a UK lender, intended as your only or main residence. The LISA must have been open for at least 12 months before completion. (2) Retirement — any withdrawal after age 60. (3) Terminal illness — withdrawals are also allowed if you have less than 12 months to live. Any other withdrawal incurs a 25% government penalty.

If you withdraw money for any reason other than first-home purchase, after age 60, or terminal illness, HMRC applies a 25% penalty on the gross withdrawal amount. Because the bonus was 25% of your contributions, a 25% penalty on the total balance recovers more than just the bonus — it also takes a portion of your original contributions and any growth. Example: £1,000 contributed becomes £1,250 with bonus; a non-qualifying withdrawal of £1,250 incurs £312.50 penalty, leaving you with £937.50, less than your original £1,000.

You can hold both, but you can only use the bonus from one of them when buying your first home. Help to Buy ISAs closed to new accounts in November 2019, but existing accounts can keep contributing until November 2029. The Help to Buy property cap is £250,000 (£450,000 in London) compared to £450,000 nationwide for LISA. Most analyses since 2020 favour LISA for higher-priced homes outside London given the higher cap.

Workplace pensions get tax relief at your marginal rate (20%, 40%, or 45%) plus employer matching contributions, generally making them better for retirement saving — particularly for higher-rate taxpayers. LISAs offer 25% bonus regardless of tax band. Withdrawals from LISA after 60 are tax-free; pension withdrawals after 55 (rising to 57 from 2028) include 25% tax-free lump sum with the rest taxed as income. For first-home purchase, LISA is the dedicated vehicle since pensions cannot be accessed before retirement age.

No. The LISA can only be opened between ages 18-39. If you turn 40 without an open LISA, you permanently lose the opportunity. Once opened, you can continue contributing until age 50 (so opening at 39 gives 11 years of contributions; opening at 18 gives 32 years). The full £1,000 annual bonus is available for each contribution year up to age 50.

Cash LISA holds your money in interest-bearing savings, similar to a Cash ISA. Interest rates as of 2026 typically range 3.5-4.75% AER. Stocks & Shares LISA invests in funds, ETFs, or shares. Historical UK equity total returns average 7-8% nominal per year over long periods, but capital is at risk. Cash LISA is generally suitable for short-term first-home savings (1-5 years); Stocks & Shares LISA is more common for retirement-focused savers with 10+ year horizons. Major providers: Moneybox, Nutmeg, AJ Bell, Hargreaves Lansdown, Skipton Building Society (cash), Beehive Money (cash).

Once you turn 50, you cannot make further contributions and no further government bonus is paid. However, the existing balance stays in the LISA and continues to earn interest or investment returns tax-free until you withdraw it. Withdrawal rules remain the same — penalty-free for first-home purchase (only if it's still your first home) or after age 60 for retirement. The account is essentially in 'maintenance mode' from 50-60.