Is a Lifetime ISA worth it?

The government adds a 25% bonus. You can withdraw without charge to buy a first home costing £450,000 or less, at 60, or with a terminal illness. Any other withdrawal carries a 25% charge, which leaves you with less than you paid in. From 29 October 2026, buying a first home that costs more than £450,000 is charged at 20%.

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What you get

A 25% bonus
On up to £4,000 a year, so up to £1,000 a year added by the government.
Tax free growth
Like any ISA, no income tax or capital gains tax on what it earns.
Cash or investments
Cash and investment versions are available. For a house purchase within a few years, cash often suits; for retirement money decades away, investments often do.
Age limits
Open it between 18 and 39. Pay in until you turn 50. The account stays open and keeps growing after that.

The three charge-free exits

Any other withdrawal carries a charge of 25% of the amount taken. On £1,250 made up of £1,000 saved and a £250 bonus, the charge is £312.50 and you receive £937.50.

From 29 October 2026 a withdrawal towards a first home costing more than £450,000 is charged at 20%. On the same £1,250 the charge is £250 and you receive £1,000. Source: HMRC Tax-free savings newsletter 24, October 2026.

The £450,000 cap has not moved since the Lifetime ISA was introduced.

Related questions

What if house prices push me over £450,000?

The cap has not moved since the Lifetime ISA was introduced. If the property you buy costs more, the withdrawal is not charge-free. From 29 October 2026 the charge on it is 20% of the amount withdrawn, down from 25%. Other withdrawals stay at 25%.

Can I use it with Help to Buy or a shared ownership purchase?

Shared ownership purchases can qualify. The rules are specific, and your conveyancer handles the withdrawal, so check the position early.

Should I use it in place of a pension?

Check any employer pension match on offer first. A pension contribution attracts tax relief at your marginal rate and an employer may add to it, where a Lifetime ISA adds a flat 25%.

What if I never buy a house?

The money stays invested and becomes available at 60 without charge. The cost is that it was locked up in the meantime.

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Where this fits

Decide what the money is for and when you will need it before you open one.

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The advisers for this subject

Sunny Bharj

Sunny Bharj

Independent Financial Adviser

Tony Springer

Tony Springer

Independent Financial Adviser

Advising through Equity & General Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority. Check the firm on the FCA register under number 474163.

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