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Lifetime ISA rules: open between 18 and 39, pay in up to GBP 4,000/year (counts within the GBP 20,000 ISA allowance), 25% bonus until age 50. Penalty-free withdrawals ONLY for a first home up to GBP 450,000 (account open 12+ months) or from age 60. Anything else: 25% exit charge, which claws back the bonus AND a slice of your own money (GBP 1,000 out of a GBP 1,000 net deposit... you get GBP 937.50). Not financial advice.
What The Lifetime ISA Calculator Works Out
- Government bonus: 25% of everything paid in, on up to GBP 4,000 a year, so a maxed saver collects GBP 1,000 a year. The GBP 4,000 counts inside the GBP 20,000 overall ISA allowance, not on top of it.
- Total pot: deposits plus bonus before any interest or growth. Five years of maximum deposits become GBP 25,000. The bonus lands monthly, so there is little dead-money delay.
- The catch: penalty-free exit runs through exactly two doors, a first home up to GBP 450,000 with the account open at least 12 months, or age 60. Open between 18 and 39; bonuses flow until 50.
- Interest or growth (advanced): compounds each year's deposit and bonus at your rate. Cash LISAs suit a house deposit within a few years; stocks and shares LISAs suit the age-60 horizon.
- Already in the LISA (advanced): an existing balance, included in the pot, the growth figure and the exit-charge sum.
- If withdrawn for anything else (advanced): the 25% exit charge on the whole pot and what you get back. Adding 25% then removing 25% of the larger number claws back 6.25% of your own money: GBP 1,000 becomes GBP 1,250, then GBP 937.50 on a panicked exit. Transfers out to an ordinary ISA count as withdrawals.
- Bonus still available before 50 (advanced): the years from your age to 50 multiplied by the GBP 1,000 maximum annual bonus. The 12-month clock for a house purchase starts at the first deposit, so opening with GBP 1 early is the folk advice.
- Home price against the cap (advanced): checks the hoped-for purchase price against the GBP 450,000 limit, unchanged since 2017, and shows what share of the price the pot covers. A few pounds over the cap blocks penalty-free use.
- A couple (advanced): both partners can hold a LISA and point both pots at the same first home, doubling the bonus. For retirement, employer pension matching and higher-rate relief usually beat the LISA; its niche is basic-rate savers who have captured the match and the self-employed.
Official rules: GOV.UK: Lifetime ISA.