Lifetime ISA (LISA)

Last updated: July 1, 2026

How does a Lifetime ISA (LISA) work and who can open one?

As well as to save for later life, you can use a Lifetime ISA to buy your first home. To open one, you’ll need to be over 18, but under 40 years old.

Up until you’re 50, you can  save up to £4,000 per year, and you’ll need to make your first payment into your account before you turn 40.

How can a Lifetime ISA help me buy a property?

The government will add a 25% ‘top up’ bonus to your saved amount, up to a maximum of £1,000 per year, which you can use towards buying your first home.

You can then use your saved funds to buy your first home, as long as the following criteria are met:

• Your home costs £450,000 or less
• Your home purchase happens more than 12 months after you’ve made your first payment into your ISA
• Your home is purchased via a solicitor or conveyancer – they will take the funds directly from the ISA provider and pay the money on your behalf
• You’re buying your home using a mortgage

There are no restrictions around which stage of the property purchase you can put your Lifetime ISA funds towards. As long as you meet the above criteria, you can put them towards a deposit at exchange of contracts.

It’s important to note that the property purchase must complete within 90 days of your conveyancer receiving the withdrawn funds. If it takes longer than that, your conveyancer can write to HMRC to request an extension.

Are there limitations on how I spend the money?

You can withdraw money from your ISA and claim any government bonus you’ve accrued, as long as you meet one of the following criteria:

• you’re buying your first home, and your account has been open for more than a year
• you’re aged 60 or over
• you’re terminally ill, with less than 12 months to live

Is there a withdrawal charge?

If you withdraw your money and don’t meet the criteria listed above, there’ll be a withdrawal charge of 25%. This amount will mean the government takes back any bonus you’d accrued on your original savings.

Can I invest in stocks and shares?

You can use your Lifetime ISA for cash or stocks and shares. Or you can also save a combination of the two.

I’m buying a home jointly – can we both use our Lifetime ISA bonuses?

If you’re buying with someone else who also has a Lifetime ISA, they can also use their savings and government bonus towards the cost of the home you’re buying.

Where does this sit within my overall ISA allowance?

The Lifetime ISA limit of £4,000 counts towards your annual ISA limit, which is £20,000 for the 2022-2023 tax year. So if you paid the full £4,000 into your Lifetime ISA, you could still pay £16,000 into other ISA products.

For more information on Lifetime ISAs, check out the official government website.

Are Lifetime ISAs being phased out?

This section reflects proposals only. No changes have been confirmed, and the Lifetime ISA (LISA) remains available as usual for now.

In June 2026, the government put forward plans to replace the Lifetime ISA with a new First Time Buyer ISA (outlined below). These plans are part of an ongoing consultation that runs until 17 August 2026, and no final decision has been made yet.

If you already have a LISA, or are thinking of opening one, you can continue to save into it under the current rules. We’ll update this guide as soon as any confirmed changes are announced.

The government has given a few reasons for reviewing the scheme, including:

• More people than expected paying the 25% withdrawal charge when taking money out for reasons other than buying a first home or retirement, suggesting the product may not work for everyone
• Findings from a 2025 Treasury Select Committee report, which said combining house deposit savings and retirement savings in one account can lead to decisions that aren’t right for all savers
• Limited availability from major banks and building societies, which the government believes has reduced accessibility

None of these proposals affect current LISA holders at this stage. You can still pay into an existing account or open a new one until any changes are confirmed.

First Time Buyer ISA (proposed)

These plans are still at proposal stage and could change following the consultation, which closes on 17 August 2026. There’s no confirmed launch date yet.

HM Treasury is considering introducing a First Time Buyer ISA (FTB ISA) as a simpler alternative to the LISA. It’s not available yet, and feedback is currently being gathered from savers, lenders and providers before any decisions are made.

What’s being proposed

Under the current proposals, the FTB ISA would differ from the LISA in a few key ways:

• The government bonus would be paid when you withdraw your savings to buy your first home, rather than added gradually each year
• There would be no withdrawal penalty, removing the current 25% charge for taking money out for other reasons
• The account would be open to UK residents aged 18+, with no upper age limit
• Both cash and stocks and shares options would be available
• You’d need to hold the account for at least 12 months before claiming the bonus
• The bonus would only be paid if you’re purchasing with a mortgage

Key details such as the annual limit, bonus rate and property price cap haven’t been set yet. HM Treasury is asking for input on how these should be balanced.

What this could mean for existing LISA holders

As things stand, you wouldn’t be able to transfer your LISA savings into an FTB ISA, as this would mean receiving two government bonuses on the same funds.

However, it may still be possible to use savings from both accounts towards the same property purchase, provided you only contribute to one of them in any given tax year.

When could the FTB ISA launch?

The consultation opened on 23 June 2026 and closes on 17 August 2026. While the government has said it wants to introduce the product as soon as possible after making a decision, no timeline has been confirmed.

In the meantime, LISAs continue to operate under the existing rules.

We’ll keep this guide up to date as soon as there’s a final outcome. You can also read the full consultation on GOV.UK.