UK Lifetime ISA Calculator 2025

A Lifetime ISA (LISA) is a UK government savings scheme that helps you save for your first home or retirement with a generous 25% government bonus. You can contribute up to £4,000 per year, and the government adds 25% on top (maximum £1,000 bonus annually). For example, if you save £4,000 in a year, the government adds £1,000, giving you £5,000 total.

The bonus is paid monthly on your contributions and applies to both cash LISAs (savings accounts) and stocks & shares LISAs (investment accounts). All interest and investment growth is completely tax-free. You can open a LISA between ages 18-39 and continue contributing until age 50. The funds can be withdrawn penalty-free for your first home purchase (up to £450,000) or from age 60 for retirement.

Eligibility requirements for 2025:

• Age: You must be aged 18-39 to open a LISA. Once opened, you can contribute until age 50.
• Residency: You must be a UK resident for tax purposes.
• First-time buyer status: Not required to open, but needed to withdraw for property purchase without penalty.
• One LISA only: You can only have one active LISA at a time (but can transfer between providers).

Important: If you're 40 or older, you cannot open a new LISA, but you can continue contributing to an existing one until age 50. The account remains open for life, and you can access funds penalty-free from age 60 or for your first home purchase (if eligible).

Penalty-free withdrawals:

• First home purchase: Property value up to £450,000, must be your first home, UK property only, account open 12+ months, must use conveyancer/solicitor.
• Age 60+: Full access to all funds from your 60th birthday onwards.
• Terminal illness: Diagnosed with less than 12 months to live (medical evidence required).

Early withdrawal penalty: If you withdraw for any other reason, you'll pay a 25% penalty on the entire withdrawal amount. This effectively removes the government bonus plus 6.25% of your original contributions. For example, withdrawing £5,000 (£4,000 contributions + £1,000 bonus) incurs a £1,250 penalty, leaving you with £3,750 - less than your original £4,000 contribution.

Tip: The penalty is harsh, so only use a LISA if you're confident you won't need the money before age 60 (except for first home purchase). For more flexible savings, consider a regular Cash ISA or Help to Buy ISA (if you already have one).

Yes, you can have multiple ISAs, but your total contributions across all ISAs cannot exceed the annual ISA allowance of £20,000 for 2025/26. Your LISA contribution (up to £4,000) counts towards this £20,000 limit.

Example combinations for 2025/26:

• LISA + Cash ISA: £4,000 in LISA + £16,000 in Cash ISA = £20,000 total
• LISA + Stocks & Shares ISA: £4,000 in LISA + £16,000 in S&S ISA = £20,000 total
• LISA + Help to Buy ISA: You can have both, but can only use one bonus for your first home purchase
• All four types: LISA + Cash ISA + Stocks & Shares ISA + Innovative Finance ISA, as long as total ≤ £20,000

Note: You can only pay into one Cash ISA, one Stocks & Shares ISA, one Innovative Finance ISA, and one LISA per tax year, but you can split your £20,000 allowance between them however you like.

The choice depends on your timeline and risk tolerance:

Cash LISA (savings account):

• Best for: Buying your first home within 5 years
• Interest rates: 3.5-4.5% AER (as of October 2025)
• Risk: Zero risk - your money is protected up to £85,000 by FSCS
• Returns: Guaranteed, but lower than potential stock market returns
• Top providers: Moneybox (4.25%), Nottingham BS (4.00%), Newcastle BS (3.75%)

Stocks & Shares LISA (investment account):

• Best for: Retirement savings (10+ years), or first home purchase in 10+ years
• Potential returns: 6-8% average annually (historical stock market returns)
• Risk: Your money can go down as well as up - not suitable for short-term goals
• Flexibility: Choose from funds, ETFs, or individual stocks
• Top providers: AJ Bell, Hargreaves Lansdown, Nutmeg

Rule of thumb: Use Cash LISA if buying a home within 5 years. Use Stocks & Shares LISA if saving for 10+ years (retirement or long-term first home goal). You can transfer between Cash and S&S LISAs if your timeline changes.

To maximize your government bonus, aim to contribute £333 per month (£4,000 per year), which earns the maximum £1,000 annual bonus. However, any amount helps:

Monthly contribution examples (2025):

• £333/month: £4,000/year + £1,000 bonus = £5,000 total (maximum)
• £250/month: £3,000/year + £750 bonus = £3,750 total
• £200/month: £2,400/year + £600 bonus = £3,000 total
• £100/month: £1,200/year + £300 bonus = £1,500 total
• £50/month: £600/year + £150 bonus = £750 total

5-year projection at £333/month (4% interest): Your £20,000 contributions + £5,000 bonus + £2,800 interest = £27,800 total. That's a 39% return on your contributions!

Tip: Even if you can't afford £333/month, start with what you can. You can increase contributions later. The 25% bonus applies to any amount up to £4,000/year. Use our calculator above to see projections for your specific contribution level.

Yes! Both partners can open separate LISAs and use them towards the same first home purchase. This is one of the most powerful features of the LISA for couples.

Couple LISA strategy (2025):

• Combined contributions: £8,000/year (£4,000 each)
• Combined bonus: £2,000/year (£1,000 each)
• 5-year savings: £40,000 contributions + £10,000 bonus + ~£5,600 interest (4% rate) = £55,600 total
• 10-year savings: £80,000 contributions + £20,000 bonus + ~£18,400 interest = £118,400 total

Requirements for both to use LISA for same property:

• Both must be first-time buyers (never owned property before)
• Property value must be £450,000 or less
• Both must be named on the mortgage and property deed
• Each LISA must be open for 12+ months before purchase
• Must use a conveyancer/solicitor (they'll claim the bonuses)

Example: A couple saving £333 each per month for 5 years could have £55,600 for their deposit - enough for a 20% deposit on a £278,000 property, avoiding high LTV mortgage rates. Use our deposit calculator to see how this affects your mortgage options.

Your LISA remains open and continues to grow tax-free, even if you don't buy a home. You have several options:

Option 1: Keep it for retirement (recommended)

If you don't buy a first home, your LISA automatically becomes a retirement savings account. You can access all funds penalty-free from age 60. The 25% bonus and tax-free growth make it an excellent retirement vehicle - better than most pensions for basic-rate taxpayers.

Option 2: Withdraw early (not recommended)

You can withdraw anytime, but you'll pay a 25% penalty on the entire withdrawal amount. This penalty removes the government bonus plus 6.25% of your original contributions. Only consider this in genuine emergencies.

Option 3: Stop contributing but leave it invested

You can stop contributing at any time (e.g., if you buy a home using other funds or exceed the £450,000 property limit). Your existing LISA balance continues to grow tax-free until age 60. You won't get new bonuses, but you keep all previous bonuses and tax-free growth.

Example scenario: You save £4,000/year for 5 years (£20,000 + £5,000 bonus = £25,000), then buy a home using other funds. If you leave the £25,000 invested at 6% annual returns until age 60 (25 years), it could grow to £107,000 - all tax-free. That's a powerful retirement boost!

Tip: Even if you're unsure about buying a home, opening a LISA before age 40 is often worthwhile for the retirement benefits alone. The 25% bonus is equivalent to a 20% pension tax relief, making it competitive with workplace pensions for basic-rate taxpayers.