What is a Lifetime ISA?
A lifetime ISA is for buying a first home or saving for retirement. You can pay in up to £4,000 a year between 18 and 50, and the government adds a 25% bonus. Withdrawals for any other purpose before age 60 carry a 25% charge.
It must be opened between ages 18 and 39, though contributions can continue to 50. The £4,000 sits within the overall £20,000 ISA allowance rather than on top of it, and comes in cash and stocks and shares versions.
For a first home the property must cost £450,000 or less, the account must have been open at least twelve months, and the purchase must be with a mortgage. That price cap has not moved since launch, which is a genuine problem in London and the South East.
The withdrawal charge is 25% of the amount withdrawn, not of the bonus, so it can return less than was paid in. The government is consulting on a first-time buyer ISA to replace it, not expected before April 2028 — so for anyone eligible now it remains worth considering.