Lifetime ISA

Who can open one, and for how long

You must be 18 or over but under 40 to open a Lifetime ISA, and you can keep paying in and earning the bonus until you turn 50. You can only pay into one Lifetime ISA in a tax year, unlike cash or Stocks and Shares ISAs, where you can now split your allowance across more than one of the same type. The £4,000 Lifetime ISA limit sits inside, not on top of, your overall £20,000 annual ISA allowance.

How the bonus works

HMRC adds a 25% bonus on top of whatever you pay in during the tax year, up to the £4,000 limit, so the most you can receive in a single year is £1,000. The bonus is paid into the account automatically, usually within a few weeks of a contribution, rather than the moment you pay in.

Using it for a first home

You can put the Lifetime ISA, bonus included, towards a first home worth up to £450,000. You must buy it at least 12 months after your first payment into the account, and use a conveyancer or solicitor to handle the withdrawal, which most mortgage purchases do automatically. If the property costs more than £450,000, you can still use the LISA money, but the withdrawal charge applies to the whole amount rather than being waived.

Buying a home with someone else

There is no restriction on buying jointly with a partner, friend or family member who is also a first-time buyer. Each of you can hold and use your own Lifetime ISA towards the same purchase. A couple who have both been saving could put two lots of bonus towards one deposit, as long as you are both first-time buyers and the property meets the £450,000 price cap and other conditions.

Cash or Stocks and Shares Lifetime ISA

The rules above, the limit, the bonus and the withdrawal charge, are identical whether you hold a cash Lifetime ISA or a Stocks and Shares Lifetime ISA. What differs is how your money is held. A cash Lifetime ISA pays interest and does not fall in value, shown in the table below. A Stocks and Shares Lifetime ISA invests the money instead, which can fall as well as rise, so it suits a longer wait before you expect to use it, typically because retirement rather than a house deposit is the more likely use. Since you can only pay into one Lifetime ISA at a time, moving between the two later means transferring the whole balance rather than running both side by side.

Using it from age 60, or the cost of using it early

From age 60, you can withdraw the full amount, bonus and any growth included, for any reason with no charge. Before that, taking money out for anything other than a qualifying first home purchase means a 25% government withdrawal charge on the amount withdrawn. Because that charge applies to the whole withdrawal rather than just the bonus, it takes back some of your own original money too, which is why it is often described as an effective penalty of around 6.25% on what you paid in. The charge is waived if you are diagnosed with a terminal illness with under 12 months to live.

What replaces it: the First Time Buyer ISA

The government has consulted on a First Time Buyer ISA intended to eventually replace the Lifetime ISA for saving towards a first home. As things stand, consultation closed 18 August 2026; no launch date confirmed by gov.uk. Existing Lifetime ISAs are unaffected for now and continue on the rules above. See the Help to Buy ISA guide for how an older, closed scheme compares, and use the Lifetime ISA calculator to see what the bonus is worth on your own numbers.