Answers · UK 2025/26
What is the Lifetime ISA bonus?
The Lifetime ISA bonus is a 25% government top-up on what you pay in, up to £1,000 a year on contributions of up to £4,000. It is paid toward a first home (up to £450,000) or retirement from age 60, with a 25% charge on other withdrawals.
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A Lifetime ISA (LISA) is a savings or investment account for people aged 18 to 39 to open, designed to help buy a first home or save for later life. The government adds a 25% bonus on your contributions, up to a maximum of £1,000 a year, because you can pay in up to £4,000 each tax year (£4,000 × 25% = £1,000). The £4,000 counts within your overall £20,000 ISA allowance. The bonus is paid monthly on contributions made, and like all ISAs, growth and withdrawals are tax-free. You can use the funds, including the bonus, to buy your first home costing up to £450,000, provided the account has been open at least 12 months, or you can withdraw from age 60 for retirement. Worked example: paying in the full £4,000 every year from age 25 to 50 gives 25 years of £1,000 bonuses — £25,000 of free government money, before any investment growth. The catch is the withdrawal charge: taking money out for any other reason before age 60 (other than terminal illness) triggers a 25% government charge on the amount withdrawn. Because that 25% charge is applied to the bonus-inflated balance, it claws back more than the bonus added — you can end up with less than you contributed, an effective penalty of around 6.25%. You can pay in only until age 50. A LISA can be Cash or Stocks and Shares; for a home purchase several years away, a Cash LISA avoids investment risk. Use the Lifetime ISA calculator to project your bonus.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.