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Compare our best lifetime ISAs

Discover how a lifetime ISA can help you save for your first home or retirement 
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Lifetime stocks and shares ISA accounts put your capital at risk, and you may get back less than you originally invested.
Last updated
January 31, 2023

What is a lifetime ISA?

Lifetime Individual Savings Accounts were launched by the government as a way to encourage more people to save, with two very specific savings goals; helping people to buy their first home and retirement.

How does a lifetime ISA work?

Similar to other ISAs, a lifetime ISA is a tax-free savings account but it comes with a special bonus. The government will add 25% to the money saved, but you can only save £4,000 each year. This means that you could get up to £1,000 added to your savings account every year. 

However, only people aged between 18 and 40 can open a lifetime ISA and you’ll only get the bonus if you use the money for buying your first home or you can withdraw after you turn 60. The government pays the bonus every year until you turn 50.

If you follow these rules there is an opportunity to get up to £32,000 from the government bonuses. 

The number of adults who paid into an ISA in 2020[1]
13million

Pros and cons of a lifetime ISA

Pros
The government gives you a 25% bonus on top of your savings
A lifetime ISA will help you get on the property ladder
Tax-free withdrawals after 60
Cons
You are limited to adding £4,000 a year to the savings account
There is a 25% penalty if you withdraw money too early or not for buying a house
You can’t use the money to buy a home that is above £450,000 in value

The one thing you need to know about lifetime ISAs...

A lifetime ISA sounds very enticing - free money from the government? Let’s go! But hold on, before you get carried away it’s important to highlight a rather big catch with lifetime ISAs. 

If you need to take the money out before you buy a first home or turn 60 then the government withdraws the 25%. This could mean that it would cost you more than what the government has added into the account. 

For example:

  • If you pay in £1,000 and the government adds £25% that’s an extra £250

  • But if you withdraw the new total of £1,250, then the government will take a quarter of that, equalling £312.50

  • You are then left with £937.50 which is less than you added in the first place 

So although you can access the money - it will cost you. 

A lifetime ISA has a very attractive bonus but you need to follow the rules for it to apply."

Our best lifetime ISA deals

Our editors pick these deals by weighing several factors such as the minimum initial, lump sump and monthly deposit, as well as the number of funds available to invest in.

Editor’s pick
Our best pick for cheap self-select lifetime ISAs
Card
AJ Bell Lifetime ISA
Open with
£500 or £25/month
Annual fee
From 0% to 0.25%

Capital at Risk. Lifetime ISA rules apply.

Show Details
Eligibility
Minimum Monthly Investment
£25
Minimum Lump Sum Stocks & Shares ISA Investment
£500
Editor’s pick
Our best pick for lifetime ISA investment options
Card
Hargreaves Lansdown Lifetime ISA
Open with
£100 or £25/month
Annual fee
From 0% to 0.45%

Capital at risk. Lifetime ISA rules apply.

Show Details
Eligibility
Minimum Monthly Investment
£25
Minimum Lump Sum Stocks & Shares ISA Investment
£100
The editorial team regularly checks and evaluates the top picks on this page, updating them at least fortnightly.

Types of lifetime ISAs

Cash lifetime ISA
Cash lifetime ISA

A cash ISA works in the same way as a standard savings account and means you can earn interest on the money you add to the account.

Stocks and shares lifetime ISA
Stocks and shares lifetime ISA

This works in the same way as a stocks and shares ISA and your money is put in the markets rather than a savings account. You still get the same bonus and withdrawal restrictions as a cash lifetime ISA but there are more risks involved.

Types of lifetime ISAs
Cash lifetime ISA
Cash lifetime ISA

A cash ISA works in the same way as a standard savings account and means you can earn interest on the money you add to the account.

Stocks and shares lifetime ISA
Stocks and shares lifetime ISA

This works in the same way as a stocks and shares ISA and your money is put in the markets rather than a savings account. You still get the same bonus and withdrawal restrictions as a cash lifetime ISA but there are more risks involved.

Lifetime stocks and shares ISA accounts put your capital at risk, and you may get back less than you originally invested.

Can you have more than one ISA?

There are four different types of ISA (cash, stocks and shares, lifetime and innovative finance) and you can pay into one of each type each year. This means technically you could have a lifetime ISA and then a stocks and shares ISA. Each adult has a £20,000 ISA Allowance each tax year and only £4,000 can be saved in a lifetime ISA which means you can use another ISA to invest the remaining £16,000.

ISAs can help your money to go further."

Saving £4,000 each year in a lifetime ISA for retirement
The money you would recieve from the government if you save £4,000 in a lifetime ISA each year from 28 years old

Source: Defaqto and Uswitch (figures above do not include interest). Updated: December 11

Lifetime ISA FAQs

How does Uswitch choose its editor’s picks?

We know that the best deals are always changing, so the editorial team at Uswitch regularly checks the rates on this page and updates them at least fortnightly. To find the best deals we compare products by taking various factors into consideration, like the interest rate (AER), the balance needed to get the highest interest rate, minimum initial deposit, withdrawal conditions and the term of the account as applicable. These factors change subject to the category.

We use this system for the whole of the market covering nearly all, so you can get an overview of what the banks and credit unions are typically offering in the UK. All the banks featured are FSCS protected, so you can be reassured that your money is safe, provided it’s within the defined limits and regulations. To find out more about how FSCS looks after your money, visit fscs.org.uk.

When can I get the government bonus?

The bonus is added to your lifetime ISA at the beginning of April as this marks the end of the tax year. It’s best to double check with your bank to find out the exact date.

How many lifetime ISAs can I have?

You can have more than one ISA, but only one lifetime ISA each tax year. 


Can I transfer a lifetime ISA to a new provider?

If your bank allows transfers - then yes! It’s always good to check of other rates so if you find a better deal you’ll be able to transfer to another provider. The transfer will also not impact your bonuses.

Can I open a lifetime ISA on behalf of someone else?

No, you can only open a lifetime ISA for yourself.

Our latest guides

Browse our guides on savings accounts and find out how you can achieve your savings goals
A guide to top savings accounts and ISAs
Retirement planning
Best cash ISA transfer
Best cash ISA transfer
The Financial Services Compensation Scheme (FSCS)
The Financial Services Compensation Scheme (FSCS)

About the author

Lucinda O'Brien
Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.
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References
1. Gov.uk annual savings statistics: Around 13 million Adult ISA accounts were subscribed to in 2019 to 2020