Ever wondered what a Lifetime ISA is? Often shortened to LISA, it stands for Lifetime Individual Savings Account and is a type of ISA – which means your savings and any investment gains within it are shielded from tax up to certain annual limits. Want to know more? Read our guide to the LISA here.
What can you use Lifetime ISAs for?
If you’re planning to buy your first home (priced at £450,000 or less), a Lifetime ISA could be a good way to save. Not only is it a tax-free savings account, but the government also boosts your contributions with a free 25% bonus.
You can save up to £4,000 each tax year, which means a potential £1,000 bonus each tax year. That extra boost can seriously accelerate your home-buying journey. Think of it this way: for every £4 you save, you get £1 free!
Plus, you can keep contributing to your Lifetime ISA until you hit 50, and then access your savings for retirement from age 60. During those ten years, your money will continue to grow (or fluctuate) depending on whether you’ve got a Cash or Stocks & Shares LISA.
Govt. withdrawal charge may apply. ISA and tax rules apply. For S&S LISA, capital at risk.
What’s the difference between the Cash LISA and Stocks & Shares LISA?
You can pick between two options: Cash LISA or Stocks & Shares LISA.
- Cash LISA: Ideal if you’re planning to buy your first home in the next few years. Your money stays as cash, and you earn interest on it.
- Stocks & Shares LISA: A better fit for long-term goals, like buying a home further down the line (think five years or more), or retirement. Your money is invested in the stock marketThe global network of stock exchanges that lets investors buy and sell shares in publicly listed companies., which could mean higher returns but also comes with more risk.
The Moneybox Cash Lifetime ISA currently offers a market-leading interest rate of 4.25% AER (variable), including a 3.05% base rate (variable) and a 1.20% AER fixed one-year bonus rate.
With the Moneybox Stocks & Shares LISA, you can choose from our three simple Starting Options. These automatically spread your investments across various assetsAn asset is anything that holds value and which can be bought and sold freely., tailored to your risk tolerance.
Rate as of 09/12/25 and subject to conditions, includes bonus rate for first 12 months. Govt. withdrawal charge may apply. ISA and tax rules apply. For S&S LISA, capital at risk.
The benefits of a Lifetime ISA
- You can contribute until you’re 50.
- Maxing out your £4,000 allowance every year from age 18 to 49 could earn you £32,000 in government bonuses.
- No monthly deposit limits, just a £4,000 annual cap.
- Use it towards your deposit for your first home up to £450,000.
- Bonuses are paid monthly, and you earn interest on the Cash LISA.
- Great for first-time home buyers and retirement savers alike.
The disadvantages of a Lifetime ISA
- You need to be 18-39 to open one.
- You won’t be able to use one if buying a property worth over £450,000.
- Your LISA needs to be open for 12 months before using it for a home purchase. Opening means making the first deposit.
- Early withdrawals (for anything other than a first home up to £450,000 or retirement) incur a 25% government charge. This can mean getting back less than you put in.
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.
Tax treatment depends on individual circumstances and may be subject to change in the future.
It’s important to consider your personal circumstances and the relevant pros and cons offered by each type of account. You can pay into a Workplace Pension, and/or a Personal Pension (SIPP) as well as a Lifetime ISA. If you decide to opt out of your workplace pension and instead pay into a Lifetime ISA, you will not benefit from any employer-matched contributions as you would with a Workplace Pension.
It may also affect your current and future entitlement to means-tested state benefits. If considering the Lifetime ISA only for the purposes of retirement, we recommend you speak with an independent financial advisor.
