Finance glossary
Lifetime ISA — LISA
Also known as: LISA
In simple terms
A Lifetime ISA (LISA) is a tax-free account for people aged 18–39 saving for a first home or for later life. The government adds a 25% bonus to what you pay in, up to a yearly limit.
On this page
What does Lifetime ISA mean?
A Lifetime ISA is a type of ISA designed to help you buy your first home or save for later life. You can open one between the ages of 18 and 39, and pay in until you turn 50.
The headline feature is a government bonus: for every £4 you save, the government adds £1 — a 25% top-up. It comes as a Cash LISA or a Stocks and Shares LISA.
How a Lifetime ISA works
You can pay in up to £4,000 each tax year, which counts towards your overall £20,000 ISA allowance. The government adds a 25% bonus on your contributions — up to £1,000 a year — paid monthly.
You can take the money out tax- and penalty-free to buy a first home worth up to £450,000, or from age 60, or if you are terminally ill. Withdraw for any other reason and a 25% government withdrawal charge applies, which can leave you with less than you paid in.
How could this affect me?
For an eligible first-time buyer or long-term saver, the 25% bonus is a substantial, guaranteed boost that an ordinary account cannot match. Used as intended, it is hard to beat.
The trade-off is flexibility. If your plans change and you need the money for something else, the withdrawal charge can claw back more than the bonus you received, so a LISA suits money you are confident you will not need early.
Example
Pay in the full £4,000 in a tax year and claim the maximum bonus:
| Your contribution | £4,000 |
|---|---|
| Government bonus (25%) | £1,000 |
| Total added that year | £5,000 |
| If withdrawn early (25% charge) | about £3,750 back — less than you paid in |
Illustrative. The early-withdrawal charge is 25% of the amount taken out, which is why it can leave you worse off than you started.
Things to watch out for
- Withdrawing for anything other than a first home, age 60, or terminal illness triggers a 25% charge.
- That charge can return less than you paid in, because it applies to your money plus the bonus.
- You must open a LISA before age 40, and can only pay in up to age 50.
- The £450,000 property price cap applies UK-wide and has not risen with house prices.
Know your rights
- The Lifetime ISA, its £4,000 limit, the 25% government bonus and the withdrawal rules are set by HMRC and the government (GOV.UK).
- Cash held in a LISA with an authorised bank or building society is protected up to £85,000 per person, per institution, by the FSCS.
- You can transfer a LISA to another LISA provider without losing the bonus or tax-free status.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, Lifetime ISA (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Lifetime ISAs explained (opens in a new tab). Accessed 22 Aug 2026.