What is a Lifetime ISA?

A Lifetime ISA lets people who open it aged 18 to 39 save up to £4,000 a year towards a first home or for later life, with a 25% government bonus. Money taken out for other reasons before age 60 usually has a 25% withdrawal charge.

Lifetime ISA limit: £4,000 a year; Counts towards the £20,000 ISA allowance. Open aged 18 to 39; payments allowed until age 50.; GOV.UK: Lifetime ISA
Lifetime ISA government bonus: 25%; Up to £1,000 a year (25% of £4,000).; GOV.UK: Lifetime ISA
Lifetime ISA withdrawal charge: 25%; On withdrawals other than for a first home, at 60 or over, or with terminal illness. It takes back the bonus and some of your own money too.; GOV.UK: Withdrawing money from your Lifetime ISA
Lifetime ISA first-home price limit: £450,000; The property must cost £450,000 or less and be bought with a mortgage.; GOV.UK: Withdrawing money from your Lifetime ISA

Tax year 2026/27. Checked 22/09/2026.

Who can open one

You must be 18 or over but under 40 to open a Lifetime ISA, and make your first payment before you turn 40. You must be UK resident, or a member of the armed forces or a Crown servant working overseas (or their spouse or civil partner).

You can pay into only one Lifetime ISA in each tax year.

Paying in and the bonus

You can pay in up to £4,000 each tax year until you turn 50. This counts towards your £20,000 overall ISA allowance.

The government adds a 25% bonus to what you pay in, up to £1,000 a year. For example, paying in £4,000 earns a £1,000 bonus.

A Lifetime ISA can hold cash, stocks and shares, or both. From age 50 you can no longer pay in or earn the bonus, but the account stays open and keeps earning interest or investment returns. If it holds investments, their value can fall as well as rise.

Using it to buy a first home

You can use the money, including the bonus, towards your first home if all of these apply:

the property costs £450,000 or less
you buy at least 12 months after your first payment into the Lifetime ISA
a conveyancer or solicitor acts for you and the provider pays the money directly to them
you buy with a mortgage (not a private mortgage from a relative, your spouse or civil partner, or certain people connected to them)
you are a first-time buyer; if you buy with someone who also has a Lifetime ISA and is a first-time buyer, you can both use yours

Other withdrawals and the 25% charge

You can also take money out without a charge once you are 60 or over, or if you are terminally ill with less than 12 months to live. If you die, the account ends and there is no charge.

Any other withdrawal is an “unauthorised withdrawal” and has a 25% charge on the amount taken out. Because the charge is 25% of a balance that already includes a 25% bonus, it takes back more than the bonus. GOV.UK’s example: £800 saved plus a £200 bonus makes £1,000; withdrawing it all costs £250, leaving £750, which is less than the £800 paid in.

Moving a Lifetime ISA into another type of ISA before 60 also counts as a withdrawal and the 25% charge applies. It can be moved to another Lifetime ISA provider with a transfer.

If you have a Help to Buy ISA as well, you can use the government bonus from only one of them to buy your first home.

Announced replacement: the First Time Buyer ISA

What is confirmed: the government has said a new, simpler First Time Buyer ISA will be offered in place of the Lifetime ISA once it is available. HMRC has stated that until then Lifetime ISAs can still be opened, and holders can keep saving into them under the existing rules.

What is not yet decided: the subscription limit, the bonus rate and the property price cap for the new product will be announced at a future fiscal event, and no launch date has been set. HM Treasury consulted on the design from 23/06/2026 to 18/08/2026.

The consultation proposed, among other things: a bonus paid when the money is used to buy a first home rather than each year, no withdrawal charge, no upper age limit, no transfers from a Lifetime ISA into the new product (because the Lifetime ISA bonus has already been paid), and the ability to use both a Lifetime ISA and the new ISA for the same purchase, paying into only one of them in a tax year. These are proposals, not law.

Things that depend on your circumstances

The Lifetime ISA has two purposes, and the rules on access differ from pensions. The guide comparing a Lifetime ISA and a pension sets the rules side by side. Whether either fits a particular situation depends on individual circumstances; MoneyHelper offers free, impartial guidance and a regulated financial adviser can give personal advice.

Tax treatment depends on individual circumstances and tax rules can change.

Questions people ask

›How much is the Lifetime ISA bonus?

25% of what you pay in, up to £1,000 a year on the maximum £4,000. The bonus stops when you turn 50.

›What is the Lifetime ISA house price limit?

£450,000. The home must also be your first, bought with a mortgage, at least 12 months after your first payment in, through a conveyancer or solicitor.

›What happens if I take money out of my Lifetime ISA early?

Unless it is for a first home, you are 60 or over, or you are terminally ill, a 25% charge applies to the amount withdrawn. This can leave you with less than you originally paid in.

›Is the Lifetime ISA being scrapped?

The government has announced it will be replaced for new savers by a First Time Buyer ISA once that product is available. Until then Lifetime ISAs can still be opened and paid into under the current rules. The new product’s limits and launch date have not been announced.

›Can I open a Lifetime ISA after I turn 40?

No. You must open it and make your first payment before your 40th birthday. If you already have one, you can keep paying in until you turn 50.

Related guides

Sources

This is information, not advice. Tax treatment depends on your circumstances and can change. For free, impartial guidance, MoneyHelper (backed by the government) can help; for a personal recommendation, speak to a regulated financial adviser.