How does the Lifetime ISA work?
Last reviewed:
In short: Save up to £4,000 a year between ages 18 and 50 and the government adds a 25% bonus. Use it for a first home up to £450,000, or from age 60.
A Lifetime ISA lets people aged 18 to 39 save up to £4,000 a year, with the government adding a 25% bonus (up to £1,000 a year). You can continue paying in until your 50th birthday.
The money can be withdrawn tax-free for two purposes only: buying a first home worth up to £450,000, or after age 60 for any reason. Withdrawing for any other reason incurs a 25% penalty, which removes the bonus and some of your own money.
Cash Lifetime ISAs work like a savings account. Stocks & Shares Lifetime ISAs let you invest in funds and shares — usually a better fit for time horizons of five years or longer.
Primary source: gov.uk/lifetime-isa