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What is a Lifetime ISA?

A Lifetime ISA, simply put, is a type of tax-free savings account that allows you to save for retirement or your first home, or both (as long as you leave the minimum required investment amount in a LISA, you can keep it open after buying a home). While it comes with a lot of restrictions, it has the benefit of a generous Government top-up. View today's best rates below or read our lifetime ISA guide to learn more.  

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Best Lifetime ISA rates

  • Moneybox Logo
    Moneybox Moneybox Cash Lifetime ISA FSCS logo
    FSCS logo
    AER
    1.40%
    Account Type
    Lifetime ISA
    Notice / Term
    None
    Interest Paid
    Monthly
    Opening Account
    Not Available Online Not Available At Branch Not Available By Mail Not Available By Telephone Available By Mobile
    Managing Account
    Not Available Online Not Available At Branch Not Available By Mail Not Available By Telephone Available By Mobile
    Rates
    Access
    Information
    Opening Restrictions
    Additional Information

    Rates

    Rate 1.40% paid at £1
    AER 1.40% paid at £1
    Interest Paid Monthly
    Interest payment Interest must be compounded
    Min Opening Amount £1
    Max Investment £0
    Introductory bonus N/A

    Access

    Withdrawals Allowed
    Early Access Allowed
    Access Note
    25% charge for withdrawals.
    Further Additions Allowed

    Information

    Min Age 18
    Max Age 39
    Taxation
    Interest is paid tax free

    Opening Restrictions

    N/A

    Additional Information

    Operated via OakNorth. LISA rules apply.
  • Newcastle BS Logo
    Newcastle BS Newcastle Cash Lifetime ISA FSCS logo
    FSCS logo
    AER
    1.10%
    Account Type
    Lifetime ISA
    Notice / Term
    None
    Interest Paid
    Anniversary
    Opening Account
    Available Online Not Available At Branch Not Available By Mail Not Available By Telephone Not Available By Mobile
    Managing Account
    Available Online Not Available At Branch Available By Mail Available By Telephone Not Available By Mobile
    Rates
    Access
    Information
    Opening Restrictions
    Additional Information

    Rates

    Rate 1.10% paid at £1
    AER 1.10% paid at £1
    Interest Paid Anniversary
    Interest payment Interest must be compounded
    Min Opening Amount £1
    Max Investment £0
    Introductory bonus N/A

    Access

    Withdrawals Allowed
    Early Access Allowed
    Access Note
    25% charge for withdrawals.
    Further Additions Allowed

    Information

    Min Age 18
    Max Age 39
    Taxation
    Interest is paid tax free

    Opening Restrictions

    N/A

    Additional Information

    LISA rules apply.
  • Nottingham BS Logo
    Nottingham BS Lifetime ISA FSCS logo
    FSCS logo
    AER
    1.00%
    Account Type
    Lifetime ISA
    Notice / Term
    Instant
    Interest Paid
    Yearly
    Opening Account
    Not Available Online Available At Branch Not Available By Mail Not Available By Telephone Not Available By Mobile
    Managing Account
    Not Available Online Available At Branch Not Available By Mail Not Available By Telephone Not Available By Mobile
    Rates
    Access
    Information
    Opening Restrictions
    Additional Information

    Rates

    Rate 1.00% paid at £10
    AER 1.00% paid at £10
    Interest Paid Yearly
    Interest payment Interest must be compounded
    Min Opening Amount £10
    Max Investment £0
    Introductory bonus N/A

    Access

    Withdrawals Allowed
    Early Access Allowed
    Access Note
    25% charge for withdrawals.
    Further Additions Allowed

    Information

    Min Age 18
    Max Age 39
    Taxation
    Interest is paid tax free

    Opening Restrictions

    N/A

    Additional Information

    LISA rules apply.
  • Nottingham BS Logo
    Nottingham BS Lifetime ISA Online FSCS logo
    FSCS logo
    AER
    1.00%
    Account Type
    Lifetime ISA
    Notice / Term
    None
    Interest Paid
    Yearly
    Opening Account
    Available Online Not Available At Branch Not Available By Mail Not Available By Telephone Not Available By Mobile
    Managing Account
    Available Online Not Available At Branch Not Available By Mail Not Available By Telephone Not Available By Mobile
    Rates
    Access
    Information
    Opening Restrictions
    Additional Information

    Rates

    Rate 1.00% paid at £10
    AER 1.00% paid at £10
    Interest Paid Yearly
    Interest payment Interest must be compounded
    Min Opening Amount £10
    Max Investment £0
    Introductory bonus N/A

    Access

    Withdrawals Allowed
    Early Access Allowed
    Access Note
    25% charge for withdrawals.
    Further Additions Allowed

    Information

    Min Age 18
    Max Age 39
    Taxation
    Interest is paid tax free

    Opening Restrictions

    N/A

    Additional Information

    LISA rules apply.
  • Skipton BS Logo
    Skipton BS Online Cash Lifetime ISA FSCS logo
    FSCS logo
    AER
    1.00%
    Account Type
    Lifetime ISA
    Notice / Term
    None
    Interest Paid
    Anniversary
    Opening Account
    Available Online Not Available At Branch Not Available By Mail Not Available By Telephone Not Available By Mobile
    Managing Account
    Available Online Not Available At Branch Not Available By Mail Not Available By Telephone Not Available By Mobile
    Rates
    Access
    Information
    Opening Restrictions
    Additional Information

    Rates

    Rate 1.00% paid at £1
    AER 1.00% paid at £1
    Interest Paid Anniversary
    Interest payment Interest must be compounded
    Min Opening Amount £1
    Max Investment £0
    Introductory bonus N/A

    Access

    Withdrawals Allowed
    Early Access Allowed
    Access Note
    25% charge for withdrawals.
    Further Additions Allowed

    Information

    Min Age 18
    Max Age 39
    Taxation
    Interest is paid tax free

    Opening Restrictions

    N/A

    Additional Information

    LISA rules apply.

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Lifetime ISAs

Derin Clark

Derin Clark

Online Reporter

At a glance

  • Lifetime ISAs (LISAs) are a form of Individual Savings Account that allows you to save for your first home or retirement entirely tax-free.
  • You can save up to £4,000 a year into a LISA and will receive a Government bonus of 25%.
  • Most LISAs are of the stocks & shares variety, but you can find a few cash-based versions as well.
  • You can open a LISA if you’re between the ages of 18 and 39, and will receive the Government bonus until you’re 50. 
  • After the age of 50 you can no longer add to your LISA or earn bonuses but you will still earn interest.
  • You can only withdraw funds on a penalty-free basis to buy your first home or from your 60th birthday
  • Withdrawals for any other reason will result in a hefty penalty charge.
  • For this reason, they should only be considered by anyone serious about saving for their first home or retirement, but for those happy with the restrictions, the 25% boost could make these accounts highly appealing.

Lifetime ISAs explained

Age restrictions and eligibility

You can open a Lifetime ISA if you're a UK resident (or Crown Servant) aged between 18 and 39 years old. There are no other restrictions to open one, although it would be best to make sure you won't need the funds you put in for any reason other than saving for retirement or buying a first home. This ensures that you don't end up having to retrieve your money and paying a penalty, which we'll cover below.

How do Lifetime ISAs work for retirement savings?

How do Lifetime ISAs work for first-time buyers?

Why should I get a Lifetime ISA?

Penalties

Can I move my Lifetime ISA to another provider if the rates are better?

Yes. While you may not want to take the money out of the LISA given the penalty involved, you can transfer your funds between LISA providers without restriction. This means you wouldn't be stuck with your original Lifetime ISA provider forever, and you'd be able to take advantage of the best Lifetime ISA rates. Remember, however, that you will need to follow the proper transfer procedure to ensure your savings remain penalty and tax-free.

Moneyfacts tip

Moneyfacts tip Leanne Macardle

NEVER close your existing LISA or withdraw the money yourself. You must follow the specific ISA transfer process.

Can I open and contribute to another ISA and a Lifetime ISA?

There are four types of ISA: the cash ISA, stocks & shares ISA, innovative finance ISA and Lifetime ISA. You can only open one new ISA of each type per tax year. There's nothing stopping you from opening all four types of account, however, for instance by putting the maximum amount in a LISA and the rest of your annual ISA allowance in a cash ISA (or a stocks & shares ISA, an innovative finance ISA, or split between the different types).

For the 2019/20 tax year, the ISA limit is £20,000, which means that if you put the maximum in a Lifetime ISA, you would still have £16,000 to distribute between the other types.

How many Lifetime ISAs can I have?

You can have as many as you'd like, but you will only be able to open and pay into one per tax year. This effectively means that you'll only get the Government bonus paid on one of your LISAs, but it also means you wouldn't be able to benefit so much from the effects of compound interest on your accumulated savings. Particularly for the purposes of buying a house, it would be much simpler to have your savings combined in a single Lifetime ISA; your solicitor/conveyancer might not even accept multiple accounts.

When will I get the Government bonus?

The Government's generous 25% bonus is calculated and added to your LISA on a monthly basis (from 6 April 2019). This does not, however, mean that you will be able to access it. As stated, the Government bonus gets paid directly through the solicitor when buying a house, and subtracted (plus a penalty) if you decide to take your money out before the age of 60 unless you are terminally ill. You will only see the bonus yourself once you're 60 and your Lifetime ISA cash becomes fully available.

Alternatives to the LISA

Stocks & shares ISAs

Others, who may be reluctant to stash their cash in a Lifetime ISA and aren't interested in saving for a first home, could choose a stocks & shares ISA instead. If you're already 40 or over such an account could provide decent returns over the next 15-20 years to help you save towards your retirement. For the risk-adverse, there are of course plenty of cash ISAs or even non-ISA fixed rate bonds to consider. Remember, however, that there is no substitute for a workplace pension when it comes to tax-free retirement saving, so don't neglect it.

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