Lifetime ISA

What is a Lifetime ISA (LISA)?

A LISA is a type of savings account that was designed specifically for people aged 18-39 who are saving for their first home or retirement. Saving into a Lifetime ISA can give your money a boost because the government adds to your savings, but there are rules around withdrawing your money that you need to know about too.

Key things to know about the Lifetime ISA

  • You can open a LISA if you’re aged 18 to 39, and save up to £4,000 tax-free each year, up to and including the day before your 50th birthday
  • the government pays a 25% bonus on top of your contributions up to a maximum of £1,000 a year
  • your £4,000 Lifetime ISA allowance forms part of your overall £20,000 annual ISA allowance
  • If you pay in your full allowance each year between the ages of 18 and 49, you can gain a total bonus of up to £32,000.

However there are restrictions on withdrawing your money:

Any withdrawals within the first 12 months of your first payment into a Lifetime ISA will incur a 25% government charge, which would mean you would get back less than you paid in.

After 12 months of making your first payment, you can withdraw money to buy your first home, but if you withdraw for any other reason than that before you reach 60 years of age, the government withdrawal charge will apply (unless you're diagnosed with a terminal illness).

Find out more about the LISA withdrawal charges.

Next steps

Ready to apply?

View full product details of our Lifetime ISA and apply online now.

Is the Lifetime ISA right for me?

A Lifetime ISA may not be right for you if you require any access other than to purchase your first home or retirement because there are restrictions around when you can withdraw your money.

Some ISAs are flexible, which means you can withdraw and pay back in throughout the tax year without affecting your overall annual ISA allowance. However, Lifetime ISAs are not flexible, so it will not be possible for withdrawals to be made and replaced without affecting your annual Lifetime ISA allowance or your overall ISA allowance.

If you close your Lifetime ISA after you reach the age of 40 you won’t be able to open a new one. If you intend to use your Lifetime ISA savings towards buying your first home or to save towards retirement, you may wish to leave a small amount in the account so you can continue to save in it in future.

For example each year. You pay in up to £4000, the Government pays a 25% bonus up to £1000

How does the Lifetime ISA government bonus work and when will it be paid?

The government will pay a 25% bonus on top of your contributions up to a maximum of £1,000 each tax year.

Your payments in...

Your bonus is calculated on any payments you make into your account from the 6th of the month to the 5th of the following month inclusive.

...your government bonus

Your bonus will be paid into your account within 14 days of the 20th day of month two.

Got more questions about Lifetime ISAs? Try our LISA FAQs page

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