Lifetime ISA (LISA)

Description

A savings account for a first home or for later life that pays a 25% government bonus on whatever you put in — up to £4,000 a year, so up to £1,000 a year of free money, paid monthly rather than at the end. You have to open it before you turn 40 and can keep paying in (and earning the bonus) until you're 50. Used for a first home, the property has to cost £450,000 or less; otherwise the money is locked until you're 60, because taking it out for any other reason costs a 25% withdrawal charge that claws back more than the bonus added. HM Treasury consulted during 2026 on replacing it with a simpler First Time Buyer ISA (bonus paid as a lump sum at purchase, no withdrawal charge, no retirement use) — no launch date has been published, and the consultation confirms LISAs can still be opened and paid into under existing rules until then.

Eligibility summary

• Available across the whole UK (England, Scotland, Wales, and Northern Ireland).
• Open to individuals — not restricted to businesses.
• Relevant age groups: 18–24, 25–34, 35–44, 45–54.

Notes

The £4,000 annual LISA limit counts towards your overall £20,000 annual ISA allowance. Withdrawals are penalty-free only for a first home costing £450,000 or less, at age 60 or over, or if terminally ill with less than 12 months to live — anything else triggers a 25% withdrawal charge on the amount taken out, which recovers the bonus plus part of your own savings. The account must have been open at least 12 months before a first-home withdrawal. Watch the First Time Buyer ISA consultation (responses closed 18 August 2026) for the successor scheme, but do not quote a launch date — none has been announced.

Requirement

Aged 18 to 39 to open one; first payment must be made before your 40th birthday. Contributions (and the bonus) can continue until you turn 50.