Lifetime ISA Calculator

A Lifetime ISA (LISA) lets you save up to £4,000 a year and adds a 25% government bonus, up to £1,000 free each year, on top. The £4,000 counts toward your overall £20,000 ISA allowance. It comes as a Cash LISA (interest) or Stocks & Shares LISA (invested), and all growth is tax-free like any ISA. It's designed for two specific goals: buying a first home or saving for retirement.

You can open a LISA between ages 18 and 39, and keep paying in (and earning the bonus) until you turn 50. Even if you can't use it yet, opening one before 40 secures the option for later. The bonus is paid monthly on what you contribute, so paying in earlier in the year captures the bonus sooner.

You can use the LISA (including the bonus) toward a first home costing up to £450,000, provided the account has been open at least 12 months and you buy with a mortgage. For couples who are both first-time buyers, each can have a LISA and combine the bonuses, up to £2,000 a year of free money toward the same home.

If you withdraw for anything other than a qualifying first home or after age 60 (or terminal illness), you pay a 25% government charge on the amount withdrawn. Because the charge is on the whole balance, not just the bonus, it claws back the bonus and a little of your own money: you can end up with less than you put in. Only use a LISA for money you're confident is for a first home or retirement.

• Saving money you might need sooner. The 25% charge on non-qualifying withdrawals can leave you worse off than a normal ISA.
• Buying above £450,000. A first home over the cap doesn't qualify, and withdrawing then triggers the charge.
• Leaving it too late to open. You must open before 40. Open early even with a token amount to keep the option.
• Ignoring the LISA vs pension question. For retirement, a workplace pension with employer matching often beats a LISA. Compare both.