Frankie Entwistle 🞄 Updated: June 2026
Written by a human, not AI
Lifetime ISAs (LISAs) are a type of saving or investment account designed to help you buy your first home or put more money away for retirement.
The game-changing bonus of up to £1,000 each tax year could help you become a home-owner sooner.
But it’s important to understand how it works, so you can decide if it’s the right product for you.
Key facts at a glance
- For ages 18-39
- For first-time buyers or people saving for life after 60
- 25% government bonus on everything you pay in each month
- Up to £4,000 a year paying in limit (£1,000 maximum bonus available each year)
- Penalty withdrawal charge applies if you take money out for anything other than an eligible first-home purchase or after you turn 60
How do lifetime ISAs work?
Opening a LISA
You need to be aged 18-39 to open a LISA.
Like all ISAs, lifetime ISAs are tax-exempt. This means that no matter how much your savings or investments grow, you won't pay any tax on the money you withdraw.
Combined with the government bonus, this makes LISAs a powerful tool for building your first-home or retirement pot.
Which is why a massive 87,250 people used a lifetime ISA towards their first-home deposit in the 2024/25 tax year*!
Paying in
Once your LISA is open, you can pay in as you would with any savings or investment account – either by Direct Debit or one-off payments.
You can pay in up to £4,000 each tax year. But if you're paying into another type of ISA as well, be aware that the total amount you can pay into ISAs (including your LISA) is £20,000 each tax year (tax year runs April to April).
You can keep paying into your lifetime ISA - and receiving the bonus - until you turn 50.
Lifetime ISA bonus
This is what sets lifetime ISAs apart from other ways to save.
Every month that you pay into your lifetime ISA, the government gives you a 25% bonus on everything you pay in. So, if you pay in £100, you'll get £25 of free money on top.
The more you pay in, the more bonus you get! Which means you'll get those first-home keys in your hand quicker.
You can put up to £4,000 into your lifetime ISA each tax year, so there's up to £1,000 bonus available each year. We'll claim the bonus for you every month, based on what you paid in the previous month. So, it's all taken care of.
Who can open a lifetime ISA?
To open a LISA, you must be:
- a UK resident
- aged between 18 and 39 (inclusive)
- planning to use your LISA to save up to buy your first home or for life after 60.
You can transfer a lifetime ISA that you have with another provider to OneFamily.
You can also transfer to a OneFamily Lifetime ISA from a cash ISA, stocks and shares ISA or matured Child Trust Fund - as long as you have £4,000 or less in the account. The same applies to anyone under 40 with a Help to Buy ISA.
What can you use a lifetime ISA for?
Either:
- Saving up to buy your first home
- Retirement (life after 60)
If you take money out for anything else, you'll be charged a withdrawal fee.
Buying your first home
You can pay money into your lifetime ISA as you would with any savings account. Then, when it's time to buy your first home, ask your conveyancing solicitor to use money from your lifetime ISA towards your deposit.
- You need to have your lifetime ISA open, with money in it, for at least a year before you buy your first home
- The home you buy 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
Find out more about using your lifetime ISA to buy your first home.
Saving for retirement
After your 60th birthday you can withdraw money from your lifetime ISA, tax-free and without paying any withdrawal charges. Tax advantages depend on your individual circumstances and could change in the future.
- You can keep paying money into your lifetime ISA until you turn 50 and withdraw after 60 (or earlier if it's to buy your first home)
- Lifetime ISAs don't come with the same benefits as pensions. They can be a useful way to top up your savings for life after 60, but you might be better off using a pension as your main way to save for retirement
- If you're not sure whether a pension or a lifetime ISA is right for you, it might be worth speaking to someone you trust to give you sound financial advice
Find out more about the differences between a pension and a lifetime ISA.
What are the rules and limits?
There are a few lifetime ISA rules that you need to follow, otherwise you may end up paying a government withdrawal charge. We'll discuss that in more detail below.
To avoid the penalty charge you must:
- use your LISA towards your first home (through a conveyancing solicitor), or wait until you're 60 to withdraw your money
- buy a home costing no more than £450,000. You must also intend to live in it and you must buy it with a mortgage
- have your LISA open, with money in it, for at least a year before you use it to buy your first home.
You won't be able to pay any more money in after you turn 50.
Build your first home deposit 25% quicker with a OneFamily Lifetime ISA
Cash vs stocks and shares lifetime ISA
Both types of LISA come with the 25% government bonus and the same rules and eligibility apply to both.
The difference is how they aim to grow your money.
- A stocks and shares LISA, like OneFamily's Lifetime ISA, invests your money. This gives it good potential to out-grow inflation and the value will go up and down over time. There is a risk that you could end up with less money then you've paid in if you withdraw at a time when the value is lower.
- A cash LISA earns interest, like regular savings accounts do. The provider will tell you what percentage of interest you'll get when you open your LISA. The risk here is that inflation, and house prices, might go up by more than the interest you're getting on your account so the value of your money might be lower when it's time to withdraw.
Find out more in our guide to the difference between cash LISAs and stocks and shares LISAs.
The lifetime ISA withdrawal charge
As mentioned above, if you don't stick to the LISA rules, you'll be charged a 25% withdrawal fee when you take money out.
As the charge is 25% of the amount you withdraw, it means you could lose some of the money you’ve paid in as well as the bonus you've been given. This is because the amount you withdraw is a combination of money you’ve put in, the government bonus, and any interest or growth.
You can learn more about the charge under different scenarios in our withdrawal charge article.
Is a lifetime ISA worth it?
Yes. As long as you intend to use the money in your lifetime ISA to buy your first home or leave it there until you turn 60.
If that's not your intention, it's not a good idea to open one. When you withdraw for anything else, you'll lose the bonus plus some of the money you've paid in.
Lifetime ISAs are the only account that comes with a 25% government bonus. This is likely to be higher than any available interest rate or expected investment returns on other accounts.
You also have the option of investing in a stocks and shares LISA or gaining interest with a cash LISA to grow your money even more.
If you intend to put more than £4,000 away each year, you could use another type of account, like a stocks and shares ISA, as well as your LISA.
Get up to £1,000 extra towards your first home deposit every year with a OneFamily Lifetime ISA
Lifetime ISA FAQs
Open a OneFamily Lifetime ISA
Our Lifetime ISA comes with a 25% government bonus, worth up to £1,000 a year!
Our Lifetime ISA invests in stocks and shares, so the value is likely to go up and down over time. This is normal for this type on investment, but it means there is a risk you could get back less than you put in if you withdraw at a time when the value is lower.
*Stats checked March 2026 using the latest HMRC data
