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Lifetime ISA (LISA) Should You Have One?


What Is A Lifetime ISA (LISA)?

A Lifetime ISA (LISA) is a flexible way to save for your first home or retirement later in life. Must be between 18 and 39 years old to be eligible to open an account.

Lifetime ISAs are available in two forms, the first option is a cash ISA, the other is a Stocks and Shares ISA where you can invest in the stock market. The real incentive is essentially the 25% extra provided by the government that’s up to £1,000 per year on whichever you choose.

How Much Can I Contribute?

You can contribute up to £4,000 per year and the government will add 25% to it up to £1,000 per tax year until your 50th birthday.

Lifetime ISAs fall within the £20,000 per tax year ISA allowance, So you will need to make sure you don’t go over this allowance if you have other ISA accounts you can learn more about this on gov.UK

Taking Money Out

To buy a home

You must buy a UK residential property to live in which costs less than £450,000. This includes the right to buy shared ownership, self builds and help to buy loans. They designed this scheme to help first-time buyers purchase their first home.

if you have already put money into a LISA but then find out you are planning to buy a property that costs more than £450,000 you will have to pay the penalty to withdraw or you can continue to keep it for retirement.


You can withdraw your money after you reach your 60th birthday without penalty. This can be withdrawn as a lump sum or in stages.

If you’re taking money out before your 60th birthday there will be a penalty of 25% from the government. This means you could end up with less than you originally put in.

Anything else

Making a withdrawal that doesn’t meet the two requirements above for buying a first home or retirement there will be a 25% penalty on all withdrawals which means you may end up with less than you originally put in. However, withdrawals made between 6th March 2020 and 5th April 2021 have a reduced penalty rate of 20%.

Need to know for a first time home buyers

  • Must be buying your first home
  • it has to be a residential UK property which costs less than £450,000
  • You must be planning to live in it.

Need to know specifically for retirement savers

  • You can only access your funds in your Lifetime ISA (LISA) when you reach the age of 60.
  • The longer you plan to keep your LISA, it might be worth considering going for the share type option.

Inkmattic Personal Finance

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