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Lifetime ISAs can help you to save for your first home or your pension. Plus they come with a Government bonus. 

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Lifetime ISAs Guide

Leanne Macardle

Leanne Macardle

Editor
Published: 30/01/2019

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.

What is a Lifetime ISA?

Age restrictions and eligibility

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?

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?

When will I get the Government bonus?

Alternatives to the LISA

couple getting key to home

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.

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