Lifetime ISA Calculator

What is a Lifetime ISA?

A Lifetime ISA is a tax-free savings account designed for two specific goals: buying your first home or saving for retirement. You can pay in up to £4,000 a year and the government adds a 25% bonus, up to £1,000 a year, with conditions attached. You must be 18 or over and under 40 to open one; once it is open, you can pay in until age 50. All growth inside the LISA is tax-free, as in any ISA.

The catch is that your LISA contributions count against your overall £20,000 annual ISA allowance (shared across Stocks & Shares ISA, Cash ISA, etc.). And if you withdraw money for any reason other than a first home, reaching 60 or terminal illness, a 25% withdrawal charge applies to the amount you take out — which means you lose some of your own money, not just the bonus.

The 25% bonus and its conditions

For every £4 you contribute to your LISA, the government adds £1. This bonus is paid monthly, so if you contribute £333 per month (£4,000 per year), you receive £83.25 per month in bonus. Over 20 years, that 25% boost compounds into a substantial pot — but only if you keep the money until age 60 or use it for a qualifying first home purchase.

If you withdraw your money early (not for a first home, not from age 60 and not because of terminal illness), a 25% withdrawal charge applies. It is charged on the whole amount you take out, not just the bonus. So withdrawing £5,000 (£4,000 of your money plus a £1,000 bonus) costs £1,250, leaving you with £3,750: you give back the bonus and lose 6.25% of your own contributions, plus any growth on the bonus. GOV.UK's own example turns £800 paid in, plus a £200 bonus, into £750 back. This makes early withdrawal expensive.

The £450k cap and the withdrawal charge

For a first home, the property must cost £450,000 or less, you must be buying with a mortgage, and the purchase must be at least 12 months after your first payment into the LISA. If the home you buy costs more, you cannot use the LISA for it without paying the 25% withdrawal charge. The bonus already paid in is not lost if you leave the money where it is: the LISA stays available for a later qualifying purchase or for withdrawal from age 60. This is why checking the price cap is the first step in any first-home LISA plan.

The 25% charge applies to the entire withdrawal amount, not just the bonus. Withdraw £10,000 at age 45 for any non-qualifying reason, and the charge is £2,500, so you receive £7,500. This makes the LISA illiquid by design — it's a serious long-term commitment.

LISA vs Help to Buy ISA vs SIPP: when each one wins

Lifetime ISA wins if: You're aged 18–39 buying a first home costing £450,000 or less in 1–5 years (the purchase must be at least 12 months after your first payment), or you're saving for retirement from age 60 and want withdrawals that are tax-free. The 25% bonus is generous, but an employer pension contribution, especially through salary sacrifice, can be worth more, so take any employer contribution on offer first.

Help to Buy ISA: closed to new savers; GOV.UK says you can no longer open one. If you already have one, you can keep paying in up to £200 a month until 30 November 2029 and must claim the 25% bonus (up to £3,000, on £12,000 of savings) by 1 December 2030. The home must cost no more than £250,000, or £450,000 in London. If you hold a Help to Buy ISA and a Lifetime ISA, you can use the government bonus from only one of them to buy your first home.

SIPP wins if: You're a higher-rate taxpayer saving for retirement. Pension contributions get tax relief at your marginal rate, so £1 in the pension costs a higher-rate taxpayer 60p, and you can usually take 25% tax-free, with the rest taxed as income. You can usually take money from age 55, rising to 57 from 6 April 2028, which is earlier than a LISA's 60. For retirement after 60 with a good income, SIPP tax relief usually wins.

Year-by-year growth

This table shows how your LISA pot accumulates, including the monthly government bonus paid alongside your contributions.

When a LISA beats a SIPP

A basic-rate taxpayer putting £2,000 into a LISA gets a £500 bonus, so £2,500 goes in. In a relief-at-source pension, the same £2,000 also becomes £2,500, because the provider claims 20% basic-rate relief. So for a basic-rate taxpayer the two are level going in. The difference comes on the way out: LISA withdrawals from 60 are tax-free, while usually only 25% of a pension is tax-free and the rest is taxed as income. Against that, a pension can be reached from 55 (57 from 6 April 2028) rather than 60, and a workplace pension can include employer contributions. Pension drawdown is taxed as income; LISA withdrawals after 60 are not.

But the pension wins if: (a) you're a higher-rate taxpayer (with 40% relief, £2,000 in the pension costs you £1,200), (b) your employer adds contributions you would otherwise miss, or (c) you want to pay in more than £4,000 a year, or keep paying in after 50. For most basic-rate savers aged 18 to 39 saving for a first home, the LISA is the simpler fit; for retirement saving alone, the comparison is closer than the bonus suggests.

When a SIPP beats a LISA

Higher-rate and additional-rate taxpayers get 40% or 45% tax relief, which changes the maths. A £4,000 net cost buys £6,667 in the pension at 40% relief, if the higher-rate relief you claim back is paid in too. That relief rises with your tax rate, while the LISA bonus is a fixed 25%. Pensions have no withdrawal charge once you reach minimum pension age (55, rising to 57 from 6 April 2028), though withdrawals beyond the usual 25% tax-free part are taxed as income.

A pension also takes far more money: up to £60,000 a year (the annual allowance, lower for some high earners and for anyone who has started taking pension income flexibly), with tax relief on contributions up to 100% of your earnings, against the LISA's £4,000 a year inside the £20,000 ISA allowance. If you pay higher-rate tax (on income over £50,270 in England, Wales and Northern Ireland), a pension usually wins for retirement saving.

Common LISA mistakes

Opening after 39: You cannot open a LISA after age 39, though you can continue contributing until 50 if already open. Don't leave it too late — the early years of the 25% bonus compound significantly.

Buying over £450k: Many first-time buyers assume their LISA works with any property. It doesn't. For a home costing more than £450,000 you cannot use the LISA without the 25% withdrawal charge. Check the price cap before committing.

Withdrawing early: An unexpected financial emergency at age 35 may tempt you to raid your LISA. The 25% withdrawal charge means you lose both the bonus and some of your own money. Use the LISA only if you're confident you won't need access before 60 or your first home purchase.

Ignoring the ISA allowance: Your LISA counts as part of your £20,000 annual ISA limit. If you max out a LISA (£4,000), you have only £16,000 left for Stocks & Shares or Cash ISA. Plan your overall ISA strategy accordingly.

Sources

Checked on 2 October 2026:

• Lifetime ISA limits, bonus and age rules: GOV.UK, Lifetime ISA.
• The 25% withdrawal charge, the £800 example, the first-home conditions (£450,000, a mortgage, 12 months after the first payment) and the Help to Buy ISA rule: GOV.UK, Withdrawing money from your Lifetime ISA.
• Help to Buy ISAs closed to new savers: GOV.UK, Affordable home ownership schemes; payment and bonus deadlines, the £3,000 bonus and the price limits: Nationwide, Help to Buy ISA FAQs (a provider page).
• Pension tax relief, the annual allowance and the 25% tax-free lump sum: GOV.UK, Pension tax relief, Annual allowance and Lump sum allowance.
• Minimum pension age rising to 57 from 6 April 2028: Finance Act 2022, section 10.

The retirement comparison assumes the same net payments into a pension, grossed up by tax relief at the rate you choose (with any higher-rate relief paid in too), the same growth rate, payments stopping at 50, and 25% of the pension taken tax-free with the rest taxed at 20%.