Lifetime ISA (LISA)

Open one between 18 and 39, pay in up to £4,000 a year, and the government adds 25% on top, paid monthly. It’s a savings account first: the bonus arrives whether or not you end up buying with it, and the money can go towards a first home worth up to £450,000 or stay invested until you turn 60. One rule worth planning around: the account has to have been open at least 12 months before you use it to buy, so opening one the week you start house hunting is usually already too late for this year’s purchase.

The 25% charge applies to the whole amount you take out, bonus included, not just to claw the bonus back. GOV.UK’s own example: pay in £800, the government adds its 25% bonus of £200, and your Lifetime ISA holds £1,000. Withdraw it all for anything other than a first home, turning 60, or a terminal illness diagnosis, and the 25% charge is taken from the full £1,000, which is £250. You’re left with £750, so despite paying in £800 of your own money you get back £750 of it: £50 worse off than if you’d never opened the account, on top of losing the entire bonus.

That’s the trap in the “25%” framing: it sounds like you only lose what the government gave you, but the charge is bigger than the bonus was, so a change of plan genuinely costs you money you paid in yourself.

These figures are GOV.UK, Lifetime ISA’s own published terms, last checked on 5 September 2026, and may have changed since. Check the official pages (overview, who can open one, and withdrawing your savings) before relying on any of them, and speak to a whole-of-market broker or your local authority about whether you’re actually eligible. This is not financial advice.