Lifetime ISA (LISA)
A government-bonused savings account for 18-39 year olds. Receive a 25% bonus on contributions up to £4,000 per year, for use towards a first home or retirement at 60.
How It Works
You open a LISA and contribute up to £4,000 per tax year. The government adds a 25% bonus (up to £1,000). You can withdraw penalty-free to buy your first home (under £450,000) or after age 60. Any other withdrawal incurs a 25% penalty.
Tax Treatment
Contributions receive a 25% government bonus. Growth is tax-free. Qualifying withdrawals (first home or age 60+) are tax-free. Early withdrawals incur a 25% penalty.
Tax Advantages
- 25% government bonus on contributions
- All growth within the LISA is tax-free
- Qualifying withdrawals are completely tax-free
Who Is This Suitable For?
Adults aged 18-39 saving for their first home or building long-term retirement savings alongside a pension.
Frequently Asked Questions
Can I use a LISA and a pension at the same time?▾
Yes. They serve different purposes and there is no restriction on holding both.
What is the early withdrawal penalty?▾
You lose 25% of the withdrawn amount, meaning you lose the bonus plus 6.25% of your own contributions.
Can I transfer a Help to Buy ISA to a LISA?▾
Yes. The transferred amount does not count towards your £4,000 annual LISA limit but does count towards the £20,000 ISA allowance.