How much does the government add to a Lifetime ISA?

The government adds a 25% bonus on what you pay in, up to a maximum of £1,000 a year. You can pay in up to £4,000 each tax year, so the most bonus you can earn is £1,000 (25% of £4,000). The bonus is paid monthly on what you have paid in that month. The £4,000 counts towards your overall £20,000 annual ISA allowance.

What is the Lifetime ISA withdrawal charge?

You can take the money out with no charge if you are buying your first home (up to £450,000, at least 12 months after your first payment, with a mortgage and a conveyancer), or from age 60, or if you are terminally ill with less than 12 months to live. For any other reason there is a 25% withdrawal charge on the amount you take out. Crucially, 25% of the total (including the bonus) takes back MORE than the 25% bonus you were given — GOV.UK's own example: £800 saved plus a £200 bonus makes £1,000, but withdrawing the lot costs a £250 charge, leaving you with £750 — less than you put in.

Can I use a Lifetime ISA to buy any home?

Only your first home, costing £450,000 or less, bought with a mortgage, through a conveyancer or solicitor (the provider pays the funds to them directly), and at least 12 months after your first payment into the LISA. You cannot use it for a buy-to-let, a holiday home, or a home you already own a share of. If you buy with another first-time buyer who also has a LISA, you can both use your savings and bonuses.

Lifetime ISA or Help to Buy ISA — what is the difference?

Help to Buy ISAs are closed to new applicants. If you already have one, you can only use the government bonus from one account (the LISA or the Help to Buy ISA) towards your first home. You can transfer a Help to Buy ISA into a Lifetime ISA — but transferring the other way, from a LISA to a Help to Buy ISA, triggers the 25% withdrawal charge. This is informational, not financial advice — for guidance on which is right for you, speak to MoneyHelper, free.

Lifetime ISA (LISA): the 25% government bonus

Q: Who can open a Lifetime ISA?

You must be 18 or over but under 40 to open a Lifetime ISA, and resident in the UK (or a crown servant or member of the armed forces abroad, or their spouse or civil partner). You must make your first payment before you turn 40. After that you can keep paying in and earning the 25% bonus until you are 50 — then the account stays open and keeps earning interest or investment returns, but no new payments or bonus.

Who can open one — and the age rules that trip people up

A Lifetime ISA is a savings or investment account designed for two things only: buying your first home, or saving for later life. You can hold it as cash, as stocks and shares, or a mix of both.

You must be 18 or over but under 40 to open one — and you have to make your first payment before you turn 40. Miss that window and you can never open a LISA.
You can keep paying in and earning the bonus until you’re 50. After 50 the account stays open and keeps earning interest or investment returns, but no new payments and no more bonus.
You must be UK resident (or a crown servant, a member of the armed forces serving overseas, or their spouse or civil partner).

Free government money — genuinely The 25% bonus is one of the most generous top-ups the UK government offers. On the full £4,000 a year, that’s an extra £1,000 every year added straight to your savings. Over the years until you buy a first home or reach 60, that can add up to tens of thousands of pounds of bonus you never had to earn.

How the 25% bonus works

Pay in money, the government adds 25% on top. The numbers are simple, but two limits matter:

What	The rule
Maximum you can pay in	£4,000 per tax year
Government bonus	25% of what you pay in — so up to £1,000 a year
When it’s paid	Monthly, on what you paid in that month
Counts towards your ISA allowance	Yes — the £4,000 sits inside your £20,000 total ISA allowance (2026/27)
You can pay in until	Age 50

So if you pay in £4,000, you end the year with £5,000 plus any interest or investment growth. Pay in £2,000 and you get a £500 bonus. There’s no need to hit the full £4,000 to benefit — every pound you save earns its 25%.

The £20,000 ISA allowance The £4,000 LISA limit is part of your overall £20,000 annual ISA allowance — not on top of it. If you put £4,000 into a LISA, you have £16,000 of allowance left for other ISAs that year.

Using it for a first home

This is what most people open a LISA for. You can put the whole pot — your savings plus the bonus — towards a first home if all of these apply:

The property costs £450,000 or less (the same cap everywhere in the UK).
You buy it at least 12 months after your first payment into the LISA.
You’re buying with a mortgage, and you use a conveyancer or solicitor — your provider pays the money straight to them.
You’re a first-time buyer (you’ve never owned a home anywhere in the world).

Buying with another first-time buyer who also has a LISA? You can both use your savings and both bonuses on the same property. You can’t use it for a buy-to-let, a holiday home, or a private mortgage from a close relative or your partner.

First home or retirement — pick the door before you commit A LISA serves two jobs from one pot. For a home, the money is reachable penalty-free as soon as you complete (after the 12-month minimum). For later life, you leave it untouched until age 60, then take it tax-free. Both are charge-free — it’s every other way of taking the money out that costs you.

The 25% charge — the trap that takes back more than the bonus

You can withdraw with no charge only if you’re: buying your first home (as above), aged 60 or over, or terminally ill with less than 12 months to live. For any other reason, there’s a 25% withdrawal charge — and here’s the part that catches people out.

The 25% bonus was added to your savings. The 25% charge is taken off the total (your savings plus the bonus). Because the charge is a quarter of a bigger number, you lose more than the bonus you were given — you end up with less than you put in. GOV.UK’s own worked example:

Step	Amount
You pay in	£800
Government adds 25% bonus	+£200 → pot of £1,000
You withdraw the lot for another reason	25% charge on £1,000 = −£250
You’re left with	£750 — £50 less than you put in

Don’t put money you might need soon into a LISA A Lifetime ISA is for a first home or retirement — full stop. If there’s any chance you’ll need the money for something else, an emergency, a car, a non-qualifying house (over £450,000), the 25% charge means you get back less than you saved. Treat it as locked away. And note: if you only need part of the money, you have to withdraw more than you need to cover the charge — GOV.UK’s example: to get £120 in cash you withdraw £160 and pay a £40 charge.

Do this now

Saving for a first home? If you’re under 40 and might buy within a few years, opening a LISA today starts the 12-month clock and starts the 25% bonus on your very first payment — even a small one. Compare cash vs stocks-and-shares providers before you commit.

Not sure a LISA is right for your situation, or weighing it against a pension or a regular savings account? Get free, impartial guidance from MoneyHelper — the government-backed money guidance service — before you lock money away.

Already have a Help to Buy ISA?

Help to Buy ISAs are closed to new applicants, but plenty of people still hold one. Two rules matter if you have both:

Towards a first home, you can only use the government bonus from one of them — the LISA or the Help to Buy ISA, not both.
You can transfer a Help to Buy ISA into a Lifetime ISA. But transferring the other way — LISA into a Help to Buy ISA — triggers the 25% withdrawal charge.

The Help to Buy ISA has no £450,000 price cap outside London but a smaller maximum bonus; the LISA has the bigger bonus and the wider use (it also funds retirement). Which suits you depends on where and when you’re buying — a good question for MoneyHelper.

Source verification

Primary sourceGOV.UK — Lifetime ISA (Overview, Who can open a Lifetime ISA, Withdrawing money — all three pages read this session; page updated 14 May 2026), cross-checked against MoneyHelper

Specific URLgov.uk/lifetime-isa

Last verified13 June 2026

ConfidenceHigh — every figure (£4,000, 25%, £1,000, £450,000, ages 18–39/40/50/60, the 25% charge and GOV.UK’s £800/£1,000/£750 worked example) read directly from GOV.UK this session. The £20,000 ISA allowance is the stated 2026/27 figure.

Key factsOpen 18–39, first payment before 40, pay in until 50 · £4,000/yr max within £20,000 ISA allowance · 25% bonus up to £1,000/yr paid monthly · charge-free for first home up to £450,000 (12+ months in, mortgage, conveyancer), age 60+, or terminal illness · 25% charge on any other withdrawal takes back more than the bonus · cash or stocks-and-shares · Help to Buy ISA: only one bonus, transfer in only

Scope & statusUnited Kingdom. This is general information, not financial advice — SortedUK is not FCA-regulated. For guidance on whether a LISA suits you, use MoneyHelper (free, government-backed) or a regulated adviser.

Lifetime ISA — common questions

How much does the government add?

25% of what you pay in, up to £1,000 a year. Pay in the full £4,000 and you get the maximum £1,000 bonus; pay in £2,000 and you get £500. The bonus is paid monthly on what you saved that month, and the £4,000 limit sits within your £20,000 total ISA allowance.

Who can open one?

You must be 18 to 39 to open a LISA and UK resident (or a crown servant or member of the armed forces abroad, or their partner). Your first payment must be before you turn 40. You can keep paying in and earning the bonus until age 50, then the account simply keeps growing.

What is the 25% withdrawal charge?

It applies if you take money out for anything other than a first home, age 60+, or terminal illness. Because the charge is 25% of the total (savings plus bonus), it takes back more than the bonus. GOV.UK’s example: £800 saved plus £200 bonus makes £1,000; withdrawing the lot costs a £250 charge, leaving you £750 — £50 less than you put in.

Can I use it for any home?

Only your first home, costing £450,000 or less, bought with a mortgage through a conveyancer, at least 12 months after your first payment. Not for buy-to-let or holiday homes. If you buy with another first-time buyer who has a LISA, you can both use your savings and bonuses.

LISA or Help to Buy ISA?

Help to Buy ISAs are closed to new applicants. If you have both, only one bonus can go towards a first home. You can transfer a Help to Buy ISA into a LISA, but transferring a LISA into a Help to Buy ISA triggers the 25% charge. For which is right for you, ask MoneyHelper — this page is information, not advice.

Sources Rules, bonus, age limits, first-home conditions and the withdrawal charge · GOV.UK — Lifetime ISA (Overview, Who can open a Lifetime ISA, and Withdrawing money from your Lifetime ISA — all read this session; page updated 14 May 2026). General guidance and the LISA-vs-other-savings comparison · MoneyHelper — Lifetime ISAs. SortedUK is not FCA-regulated and this is general information, not financial advice. Last reviewed: 13 June 2026.

The Lifetime ISA: £1,000 a year free — and the one charge to understand first.