Lifetime ISA £4,000 Limit and 25% Bonus: The Maths for 2026/27
How the Lifetime ISA's £4,000 annual limit and 25% government bonus work together in 2026/27, with a worked example and the withdrawal penalty rules.
The 2026/27 Lifetime ISA Numbers
| Item | 2026/27 value |
|---|---|
| Annual LISA contribution limit | £4,000 |
| Government bonus rate | 25% |
| Maximum annual bonus (on £4,000) | £1,000 |
| Overall ISA allowance (LISA counts within this) | £20,000 |
| First home price cap for penalty-free withdrawal | £450,000 |
| Age range to open an account | 18-39 |
| Age contributions/bonus can continue to | 50 |
Worked Example: Maximum Annual Contribution
| Step | Amount |
|---|---|
| Your contribution | £4,000 |
| Government bonus (25%) | £1,000 |
| Total added to the account | £5,000 |
Over several years of maximum contributions, the bonus compounds significantly — for example, 10 years of maximum £4,000 contributions adds £40,000 personally and £10,000 in bonuses, before any investment growth.
The Withdrawal Penalty Trap
| Withdrawal reason | Penalty? |
|---|---|
| First home purchase (up to £450,000, account 12+ months old) | No |
| From age 60, any purpose | No |
| Terminal illness | No |
| Any other reason | Yes — 25% charge on the whole withdrawal |
LISA vs the Closed Help to Buy ISA
| Feature | Lifetime ISA | Help to Buy ISA (closed to new savers) |
|---|---|---|
| Annual contribution | £4,000 | Effectively ~£2,400/year (£1,200 initial + £200/month) |
| Government bonus | 25% | 25% |
| Property price cap | £450,000 (nationwide) | Lower regional caps (historically £250,000/£450,000 London) |
| Open to new savers? | Yes (18-39) | No — closed November 2019 |
Lifetime ISA (LISA) Calculator
Model Lifetime ISA contributions with the 25% government bonus. First home purchase mode and retirement mode.
Open Lifetime ISA calculatorFrequently asked questions
How much can I pay into a Lifetime ISA in 2026/27?
£4,000 per tax year, which counts towards (not on top of) the overall £20,000 ISA allowance — so a full LISA contribution leaves £16,000 of remaining ISA allowance for other ISA types in the same tax year.
How much is the government bonus on a Lifetime ISA?
25% of whatever is paid in, added by the government. On the maximum £4,000 annual contribution, that's a £1,000 bonus, making £5,000 in total added to the account each year at maximum contribution.
Who can open a Lifetime ISA?
Anyone aged 18 to 39 can open one. Once opened, contributions (and the matching bonus) can continue until age 50, giving a maximum contribution window of up to 32 years if opened at 18.
What can Lifetime ISA money be used for without penalty?
Either a first home purchase (up to £450,000 property value) after the account has been open at least 12 months, or withdrawal from age 60 onwards for any purpose — both free of the withdrawal penalty.
What happens if I withdraw from a Lifetime ISA for another reason?
A 25% government withdrawal charge applies to the whole withdrawn amount (not just the bonus portion), which means withdrawing purely your own money for an unauthorised reason still leaves you with less than you paid in — for example, withdrawing £1,000 of your own unbonused contributions triggers a £250 charge, leaving £750.
Is the Lifetime ISA better than a Help to Buy ISA for first-time buyers?
For most people, yes — the LISA allows a larger annual contribution (£4,000 vs Help to Buy ISA's effective £2,400/year), a higher property price cap (£450,000 vs the Help to Buy ISA's lower regional caps), and Help to Buy ISAs closed to new savers in November 2019, though existing Help to Buy ISA holders can still contribute to their existing account.
Can I have a Lifetime ISA and a Cash ISA in the same year?
Yes — since the £4,000 LISA limit is a sub-limit of the overall £20,000 ISA allowance, you can split the remaining £16,000 between a Cash ISA, Stocks and Shares ISA, or Innovative Finance ISA in the same tax year, subject to normal ISA rules on the number of accounts of each type.
What happens to Lifetime ISA savings if I don't buy a house or reach 60?
The money remains in the account, continuing to earn the annual 25% bonus on new contributions, until you either buy a qualifying first home, reach age 60, become terminally ill, or make a withdrawal subject to the 25% penalty.
Related reading
Lifetime ISA Withdrawal Penalty: The Real Cost of Taking Money Out Early
Withdraw from a Lifetime ISA for anything other than a first home or after age 60, and you lose 25% of the withdrawal — not just the bonus. Here is exactly how the penalty works and when it applies.
Lifetime ISA for a First Home 2026/27: The 25% Bonus and Its Rules
A Lifetime ISA adds a 25% government bonus on up to £4,000 saved a year — up to £1,000 free money annually — but the property price cap and withdrawal penalty catch some first-time buyers out. Here's how it actually works.
The 90-Day ISA Cash Transfer Rule: How to Move Without Losing Your Allowance
How to transfer a cash ISA correctly, the 15-day FCA rule, LISA transfer fees, partial transfers explained, and the step-by-step process.