How does a Lifetime ISA work?

For people aged 18 to 39 saving for their first home or for later life.

Applies to: England, Scotland, Wales, Northern Ireland Last checked against official sources: 6 October 2026

You can save up to £4,000 a year towards your first home or later life, and the government adds a 25% bonus (up to £1,000 a year).

Open and pay in first before you're 40; you can pay in until 50.
The £4,000 counts towards your £20,000 ISA allowance.
You can hold cash, stocks and shares, or both.

Key facts

£4,000 a year
25% bonus up to £1,000
Start before 40

Who can open one

You can open a Lifetime ISA if you are 18 or over but under 40. You must also be either:

living in the UK (UK resident), or
a member of the armed forces or a crown servant working abroad, or their husband, wife or civil partner

You can make your first payment only before you turn 40. You can then keep paying in until you are 50.

Limits for 2026/27

Rule	Amount
Most you can pay in each tax year	£4,000
Government bonus	25% of what you pay in
Most bonus each tax year	£1,000
Total ISA allowance (all ISAs)	£20,000

The £4,000 counts towards your £20,000 ISA allowance. You can only pay into one Lifetime ISA in each tax year.

Example: you pay in £100 a month for a full tax year. That is £1,200. The bonus is 25% of £1,200, so £300. You have £1,500 before any interest or growth.

At 50 the account stays open, but you cannot pay in or get any more bonus. Your money still earns interest or investment returns.

When you can take money out without a charge

You can take your money out with no charge if:

you are buying your first home (see the rules below)
you are 60 or over
you are terminally ill, with less than 12 months to live

Rules for buying your first home

the home must cost £450,000 or less
you must buy it at least 12 months after your first payment into the Lifetime ISA
a conveyancer or solicitor must act for you in the purchase
you must be buying with a mortgage

You cannot use it if you are getting a private mortgage from a relative (or their husband, wife or civil partner), from your own husband, wife or civil partner, or from their relatives.

The 25% withdrawal charge

If you take money out for any other reason, you pay a 25% charge. This takes back the bonus and a bit of your own money too.

Example 1: you pay in £800 and get a £200 bonus, so you have £1,000. If you take it all out, the charge is £250 and you get £750. That is £50 less than you paid in.

Example 2: you need £120 in cash. You must take out £160. The charge is £40 (25% of £160), leaving you £120.

Things to know

Your Lifetime ISA can hold cash, stocks and shares, or a mix. Stocks and shares can go down as well as up.
ISAs do not close at the end of the tax year. Your savings stay tax free while they are in the ISA.
The rules are the same in England, Scotland, Wales and Northern Ireland.

Related guides

Where these figures come from

Get it done

This takes you to the official service, which is free to use.

Who can open one

Common questions

What is the Lifetime ISA withdrawal penalty?

If you take money out for any reason other than buying your first home, reaching 60 or being terminally ill, you pay a 25% withdrawal charge.

What is the Lifetime ISA house price limit?

The home you buy must cost £450,000 or less. You must buy it at least 12 months after your first payment, with a mortgage and a conveyancer or solicitor acting for you.

Can a couple both use a Lifetime ISA to buy a home?

Yes, if the person you are buying with also has a Lifetime ISA, you can both use your savings and bonus, as long as you both meet the first-time buyer conditions.

What happens to a Lifetime ISA at 50?

Your account stays open, but you can no longer pay in or earn the 25% bonus.

Official sources

1.Lifetime ISAwww.gov.uk/lifetime-isa
2.Lifetime ISA: withdrawing moneywww.gov.uk/lifetime-isa/withdrawing-money-from-your-lifetime-isa

Checked against GOV.UK on 6 October 2026

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