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What is a lifetime ISA?

A lifetime ISA is an ISA with a government bonus that can help you save for your first home or retirement.

Lifetime ISA rules explained

  • You can save up to £4,000 into your lifetime ISA each year, subject to contributions made to other types of ISA. Your total ISA annual allowance limit - including your lifetime ISA - is £20,000.
  • You get a 25% government bonus on your savings if you use the money to buy your first home or to pay for your retirement (from the age of 60). For every £4 you save the government tops this up with a £1 bonus, up to a maximum of £1,000 each year.
  • Withdrawals that are not for a first time house purchase or for your retirement after you are 60 years old will be subject to a 25% withdrawal charge, which means you could get back less than you pay in.
  • Your lifetime ISA must be open for 12 months before it can be used to buy your first home, otherwise it will incur a 25% government withdrawal charge.
  • Lifetime ISAs can be saved in cash or invested in stocks and shares. Stocks and shares tend to provide greater potential for growth over the long term, but they also carry greater risk that the value of your investment could fall. OneFamily's Lifetime ISA invests in stocks and shares so its value can go down as well as up meaning you could get back less than has been paid in.
  • You can transfer to a lifetime ISA from a cash ISA, stocks and shares ISA, or matured Child Trust Fund - so long as the value is £4,000 or less. The same applies to anyone under 40 with a Help to Buy ISA.

Got a Help to Buy ISA? Find out more about the differences here.

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Lifetime ISA eligibility

To be eligible to open a lifetime ISA you must be:

  • a UK resident
  • aged between 18 and 39

Once opened you can continue contributing to your lifetime ISA until you are 50.

If you already have a lifetime ISA, you can still open a new one. However, you can only pay into one each tax year and only receive the bonus on one lifetime ISA at a time.

Watch our Lifetime ISA video

Find out how you could get a £1,000 government bonus towards your first home or retirement with the OneFamily Stocks and Shares Lifetime ISA.

OneFamily Lifetime ISA

How to use a lifetime ISA for first-time buyers

You can withdraw all or some of your lifetime ISA balance when you purchase your first home, but there's a few important points to consider:

You'll need to save into the account for at least 12 months before purchasing your first home
The home you purchase must be for you to live in - you can't rent it out as a buy-to-let
The property you buy needs to be valued at £450,000, or less, and you'll need to be using a mortgage as well as your Lifetime ISA
The property must be in the UK

How to use a lifetime ISA for retirement

After your 60th birthday you can withdraw some or all your savings, tax-free and without penalty. Tax advantages depend on your individual circumstances and could change in the future.

If you're self-employed you may want to use a lifetime ISA in place of a company pension. A lifetime ISA doesn't come with the same benefits as pensions but could be a useful way of topping up your savings ready for retirement

If you've already got savings, or you're unsure about whether a pension or lifetime ISA is right for you, it might be worth speaking to an independent financial adviser

Open a lifetime ISA with OneFamily

Find out more about our Lifetime ISA, which invests in stocks and shares, and apply here:

OneFamily Lifetime ISA

Looking for more information on our Lifetime ISAs?

Read our lifetime ISA FAQs or use our lifetime ISA calculator to see how your investments could grow over time.