£3,500 Lifetime ISA Contribution — Government Bonus 2025/26

Worked example: where the £875 comes from

The bonus is paid by HMRC to your LISA provider monthly — typically 4–9 weeks after each qualifying contribution. You do not have to claim it; it appears in the account automatically and is then invested (or held as cash) alongside your own money.

Long-term projection at £3,500/yr

If you contribute £3,500 every tax year (receiving £875bonus each time) and invest in a stocks & shares LISA averaging 5% net growth a year:

5% net annual growth is illustrative — actual returns vary and capital is at risk in stocks & shares LISAs. Cash LISA rates currently sit around 3–4.5% AER.

Eligibility check

• ✓ Aged 18–39 to open a Lifetime ISA (you can keep contributing until age 50).
• ✓ UK resident (or Crown employee posted overseas / spouse of one).
• ✓ Have a National Insurance number.
• ✓ For first-home use: never owned UK or overseas property, buying with a residential mortgage, completing on a property ≤ £450,000.
• ✓ Account must be open at least 12 months before first-home withdrawal.

Common mistake: buying above £450,000

The single biggest LISA trap is completing on a first home priced above the £450,000 cap. The cap applies to the purchase price, not your deposit. Cross it by even £1 and the LISA withdrawal becomes unauthorised, triggering a 25% government penalty — on the full £4,375 that's £1,094, leaving you with £3,281 (about £219 less than you contributed). The cap has not risen since 2017 despite rising house prices, so check local averages before locking money into a LISA in expensive areas.

LISA vs other ISA types

All ISA types share the overall £20,000 annual allowance. A £3,500LISA contribution leaves £16,500 for other ISAs in the same tax year.

Compare other contribution amounts

Frequently Asked Questions