A Lifetime ISA is a savings account you can use to buy your first home or save for later life. You can put in up to 4,000 pounds each year until you're 50, the government adds a 25% bonus worth up to 1,000 pounds per year, and you must make your first payment before you're 40, as of Nov 2026.
The Lifetime ISA is the ISA where the government adds a bonus to what you save, which is why first-time buyers and people saving for later life keep asking about it. The catch is in the age rules and in how its limit eats into your wider ISA allowance. Here's how it works, set out from GOV.UK's own guidance.
The Lifetime ISA in one table
| What GOV.UK says | |
|---|---|
| What it's for | Buying your first home or saving for later life |
| Yearly limit | Up to 4,000 pounds each year, until you're 50 |
| Government bonus | 25% of what you put in, up to a maximum of 1,000 pounds per year |
| Age to open | 18 or over, and under 40 |
| First payment | Must be made before you're 40 |
| What it can hold | Cash, stocks and shares, or a combination of both |
| Wider ISA limit | The 4,000 counts towards your annual ISA limit of 20,000 pounds for the 2026 to 2027 tax year |
| At 50 | No more payments and no more bonus, but the account stays open |
| Joint accounts | Not allowed: you can't hold an ISA with someone else |
How the 25% bonus works out
The bonus is a flat 25% of what you pay in, capped at 1,000 pounds per year. Put in the full 4,000 and the cap is exactly what you'll get, because a quarter of 4,000 is 1,000. Pay in half the limit and the bonus is half the maximum. Nothing you pay above 4,000 a year can go into a Lifetime ISA, so there's no extra bonus to chase beyond that point.
You don't apply for the bonus separately. GOV.UK describes it simply as the government adding 25% to your savings, and you keep earning it every year you pay in until your 50th birthday.
The age 40 rule is about your first payment
This is the detail people get wrong. You have to be under 40 to open a Lifetime ISA, and GOV.UK says you must make your first payment into it before you're 40. It doesn't say you have to stop at 40. Once that first payment is in, you can keep paying in, and keep collecting the bonus, until you turn 50.
So if you're 38 or 39 and on the fence, waiting is the expensive choice. Open it and make a payment before your 40th birthday, even a small one, and the door stays open for another decade of contributions. Leave it and the door shuts for good.
Where it sits among the four ISA types
GOV.UK lists 4 types of ISA, and they all share one yearly allowance:
- Cash ISA
- Stocks and shares ISA
- Innovative finance ISA
- Lifetime ISA
In the 2026 to 2027 tax year, the maximum you can save across all your ISAs is 20,000 pounds, and the Lifetime ISA's 4,000 counts towards it. If you fill your Lifetime ISA, the rest of your 20,000 pounds is still free for the other types. You must be 18 or over to open any ISA, and you must be resident in the UK, or a member of the armed forces or a Crown servant (or their spouse or civil partner) if you don't live in the UK. Children under 18 can have a Junior ISA instead.
If you're weighing a Lifetime ISA against other ways of saving for later life, this look at the outlook for defined contribution pensions is a useful companion read.
What happens when you turn 50
At 50, GOV.UK says you won't be able to pay into your Lifetime ISA or earn the 25% bonus. Your account doesn't close, though. It stays open, and your savings still earn interest or investment returns, depending on whether you've held cash, stocks and shares or both.
The other date that matters is your 60th birthday, because this is where the catch sits. GOV.UK says you can withdraw money if you're buying your first home, you're aged 60 or over, or you're terminally ill with less than 12 months to live. Take money out for any other reason and you'll pay a withdrawal charge of 25%, as of Nov 2026, so don't put in anything you might need back before then.
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Using it for a first home
Buying your first home is one of the two uses GOV.UK names for the account. GOV.UK's conditions are that you buy at least 12 months after your first payment, use a conveyancer or solicitor, and buy with a mortgage, and that there's no withdrawal charge on properties costing 450,000 pounds and under. If you work for yourself, saving the deposit is only half the job, and this guide to getting a mortgage when you're self-employed covers what lenders will want to see.
My advice on the Lifetime ISA
If you're under 40 and buying your first home or saving for later life is on the cards, open one and make a payment now, because the first payment before 40 is the gate everything else depends on. Fill it to 4,000 if you can, since that's what earns the full bonus. Only pay in money you can leave alone until you buy that home or turn 60, because of the 25% withdrawal charge. Read GOV.UK's Lifetime ISA pages before you pick a provider.
Frequently asked questions
How much can I put into a Lifetime ISA?
Up to 4,000 pounds each year, until you're 50. That 4,000 counts towards your overall ISA limit, which is 20,000 pounds for the 2026 to 2027 tax year.
How much is the Lifetime ISA bonus?
The government adds a 25% bonus to your savings, up to a maximum of 1,000 pounds per year.
Can I open a Lifetime ISA at 40?
No. You must be 18 or over and under 40 to open one, and you must make your first payment before you're 40.
Can I keep paying into a Lifetime ISA after 40?
Yes. Once you've made your first payment before 40, you can keep paying in until you turn 50.
What happens to my Lifetime ISA at 50?
You can't pay in or earn the 25% bonus any more, but the account stays open and your savings still earn interest or investment returns.
Can a Lifetime ISA hold stocks and shares?
Yes. GOV.UK says you can hold cash or stocks and shares in your Lifetime ISA, or a combination of both.
