UK ISAs · August 2026

Lifetime ISA: who can open one, how the 25% bonus works, and when the charge applies

Capital at risk. The value of investments can fall as well as rise, and you may get back less than you put in. Past performance is not a guide to future returns.

Capital at risk. The value of investments can fall as well as rise, and you may get back less than you put in.

Lifetime ISA rules: 25% bonus, first-home withdrawal, and when the 25% charge applies.

Last updated: 27 September 2026.

This is general information, not personal advice. It is not a recommendation to open a Lifetime ISA. A Cash LISA is cash. A Stocks and Shares LISA holds investments, and capital can fall. The 25% bonus is extra money paid in. It is not a guaranteed return on a Stocks and Shares LISA.

A Lifetime ISA (LISA) is still open. You can pay in up to £4,000 a tax year between 18 and 50, and the government adds a 25% bonus. Taking the money out for anything other than a first home, age 60, or terminal illness usually means a 25% charge.

Quick answer

A Lifetime ISA adds a 25% government bonus on contributions within LISA rules — with a withdrawal charge if you take money out outside the allowed uses.
Cash LISA vs Stocks and Shares LISA: one holds cash; the other holds investments and capital can fall.
Age, first-home and retirement rules are strict; check GOV.UK before you pay in.
This is general information, not personal advice — a LISA is not automatically the right wrapper for everyone.

This is general information, not personal advice. It is not a recommendation to open a LISA. A Stocks and Shares LISA can fall in value.

The bonus is not a guaranteed return.

There are no live The Finance Lowdown referral programmes on this page.

There is no LISA rate table on this snapshot. Rules on this page follow GOV.UK Lifetime ISA.

The product is still open. A First-Time Buyer ISA was at consultation stage; that consultation closed on 18 August 2026.

Official position: you can open a LISA until any new product becomes available. This page does not treat a LISA as closing in April 2028.

What a Lifetime ISA is (Cash vs Stocks and Shares)

A Lifetime ISA is a UK ISA with a government bonus, used for a first qualifying home or for money from age 60. There are two types:

Cash LISA. The balance is cash.

FSCS, if it applies, is the deposit scheme. See easy-access savings accounts in the UK for ordinary cash savings, which are a different product.

Stocks and Shares LISA. The balance is investments. The value can fall.

You could get back less than you put in, including after the bonus. FSCS, if it applies to the investments, is the investment scheme, not the deposit scheme. See Stocks and Shares ISA fees.

NS&I is not a LISA provider.

Who can open, pay in, and get the bonus

You can open a LISA from age 18 until you turn 40. You can then pay in up to £4,000 each tax year until you turn 50.

At 50, subscriptions and the bonus stop. The account can stay open.

The £4,000 counts toward the £20,000 ISA allowance for that tax year. The 25% bonus is extra.

It does not come out of the £20,000. The maximum bonus is £1,000 a year, on a £4,000 subscription.

You can subscribe to one LISA per tax year. You can hold more than one LISA over a lifetime.

A LISA-to-LISA transfer does not trigger the 25% charge. Withdrawing and reopening does.

Never withdraw cash yourself when transferring an ISA — always use your new provider’s official ISA transfer service to preserve your tax-free status.

When the 25% charge applies (and when it does not)

Charge-free withdrawals are limited to:

buying your first qualifying home
from age 60
terminal illness

Anything else usually means a 25% charge on the amount withdrawn, including bonus.

The charge is not “just giving the bonus back”. It takes a slice of your own money too.

Labelled 25% charge illustrations if there is no growth. Not a rate table.
Illustration	Paid in	Bonus	Pot	Charge (25%)	Back
A (GOV.UK example)	£800	£200	£1,000	£250	£750
B	£4,000	£1,000	£5,000	£1,250	£3,750
C	£1,000	£250	£1,250	£312.50	£937.50

Illustration A: you get £750 back. That is £50 less than you put in. Illustration B: you get £3,750 back.

Net £250 worse than your own £4,000, if there is no growth. Illustration C: you get £937.50 back.

If there is no growth, the net loss is 6.25% of your own money. These are labelled illustrations, not a scare headline. On a Stocks and Shares LISA the pot can also have grown or fallen before the charge is applied.

First-home rules and the £450,000 cap

The house-price cap is still £450,000 UK-wide. That is a product rule, not advice about whether a given purchase qualifies.

A charge-free first-home withdrawal is typically only available where all of these hold, as published facts:

it is a UK property
you are a first-time buyer, including the overseas ownership test
you are taking out a mortgage
a conveyancer handles the withdrawal
you have held the LISA for 12 months
you complete within 90 days of the withdrawal

Confirm the live GOV.UK and provider wording. This is not a recommendation to use a LISA for a purchase.

Age 60 and terminal illness

From age 60, withdrawals can be made without the 25% charge. Terminal illness is the other charge-free route. Those are the published exceptions.

They are not a reason, in this article, to open a LISA as a pension substitute. A Stocks and Shares LISA can still fall in value before 60.

Help to Buy ISA transfer

Help to Buy ISAs are closed to new accounts. Existing ones can still receive payments until November 2029, and the bonus can still be claimed until November 2030.

You cannot use both a Help to Buy ISA bonus and a LISA bonus on the same purchase.

Money moved from a Help to Buy ISA into a LISA counts toward the £4,000 LISA annual limit. A LISA-to-LISA transfer does not trigger the 25% charge. Withdrawing from a LISA to open another one does.

2027 Cash ISA cap (not in force; LISA sits outside those rules)

A £12,000 Cash ISA cap for people under 65 has been announced from 6 April 2027. It is not in force now.

Official position: LISA limits remain the same. The LISA sits outside those anti-circumvention rules because of the withdrawal charge.

This page does not quote a combined “£4,000 Cash LISA plus £12,000 Cash ISA” figure. Do not treat 2027 arithmetic that is not in the official wording as a current limit.

FSCS and what does not move a LISA

A Cash LISA is a deposit for FSCS purposes, up to £120,000 per person per authorised firm from 1 December 2025.

Investments in a Stocks and Shares LISA sit in the investment scheme, still £85,000, for firm failure or a shortfall, not for the market going down. See FSCS protection limits.

The Current Account Switch Service does not move LISAs. A LISA is moved as an ISA transfer, not by switching a current account.

NS&I is not a LISA provider.

The catch

Important things to know

A LISA is still open. Do not treat April 2028 as a GOV.UK closing date.
Open from 18 to under 40. Pay in until 50. Then the account can stay.
£4,000 a year counts toward the £20,000 ISA allowance. The 25% bonus is extra (max £1,000 a year).
One LISA subscription per tax year. More than one LISA can be held over a lifetime.
Charge-free: first qualifying home, age 60, terminal illness. Otherwise 25% of the amount withdrawn, including bonus.
The charge is not “just the bonus back”. GOV.UK: £800 in → £750 back. Same ratio: £4,000 in → £3,750 back. £1,000 in → £937.50 back.
House-price cap still £450,000 UK-wide.
Help to Buy ISA is closed to new accounts; you cannot use both bonuses on one purchase.
2027 Cash ISA cap is not in force. LISA limits remain the same on the official wording. No invented £4k + £12k split.
Cash LISA = deposit FSCS. Stocks and Shares LISA investments = investment FSCS. Capital can fall on the latter. The bonus is not a guaranteed return.

Lifetime ISA: FAQs

What is a Lifetime ISA?

A Lifetime ISA is a UK ISA with a government bonus, used for a first qualifying home or for money from age 60. There are two types: a Cash LISA, where the balance is cash, and a Stocks and Shares LISA, where the balance is investments and the value can fall. It is still open. This is general information, not personal advice.

How does the 25% Lifetime ISA bonus work?

You can pay in up to £4,000 each tax year until you turn 50. The government adds a 25% bonus, extra to the £20,000 ISA allowance. The maximum bonus is £1,000 a year, on a £4,000 subscription. The bonus is extra money paid in. It is not a guaranteed return on a Stocks and Shares LISA.

What is the Lifetime ISA withdrawal penalty?

Taking the money out for anything other than a first home, age 60, or terminal illness usually means a 25% charge on the amount withdrawn, including bonus. The charge is not just giving the bonus back. It takes a slice of your own money too. GOV.UK: £800 in, £750 back.

Can I use a Lifetime ISA to buy my first home?

A charge-free first-home withdrawal is typically only available where published facts all hold: a UK property, first-time buyer including the overseas ownership test, a mortgage, a conveyancer, a 12-month hold, and completion within 90 days. Confirm live GOV.UK wording. This is not a recommendation to use a LISA for a purchase.

What is the difference between a Cash LISA and a Stocks and Shares LISA?

A Cash LISA is cash. FSCS, if it applies, is the deposit scheme, up to £120,000 per person per authorised firm. A Stocks and Shares LISA holds investments. The value can fall. You could get back less than you put in, including after the bonus. FSCS for those investments is the investment scheme, still £85,000.

Is the Lifetime ISA still open?

Yes. The product is still open. A First-Time Buyer ISA was at consultation stage; that consultation closed on 18 August 2026. Official position: you can open a LISA until any new product becomes available. This page does not treat a LISA as closing in April 2028.

Is a Cash Lifetime ISA covered by FSCS?

See FSCS and what does not move a LISA above.

Written by Steven — Editor, The Finance Lowdown

Fact checked by Angela — Editorial Reviewer

Last updated: 27 September 2026