By clicking a retailer link you consent to third-party cookies that track your onward journey. This enables W? to receive an affiliate commission if you make a purchase, which supports our mission to be the UK's consumer champion.
Faye was Headline Money Consumer Money Journalist of 2023 and a Wincott Award finalist in 2025. She's been investigating scams for nearly a decade.
In this article
Retirement and buying your first home are two of the biggest money milestones a person can experience. Opening a tax-free lifetime Isa allows you to save for either or both of these life events, and get thousands of pounds of government cash as a bonus.
But lifetime Isas have some fairly strict rules attached, and the interest rate you can earn varies widely between providers. This guide explains how lifetime Isas work and the best providers based on whether you want a cash or stocks and shares Isa.
The lifetime Isa (Lisa) is a tax-free savings or investments account designed to help those aged 18-39 at the time of opening to buy their first home or save for retirement.
The main selling point of lifetime Isas is the generous 25% bonus the government pays on your savings when you come to use them, up to a maximum of £32,000 if you save for many years. We've got all the latest rates, but if you want to know more about how lifetime Isas work first, click here to jump straight to that section.
The table gives an overview of all the cash lifetime Isas currently on the market listed in interest rate order, so you can see which offers the best rate and terms for you. The links take you to the provider's website.
For more detailed information, click on the list of providers below the table.
| Provider | AER | How to open | Does it accept Isa transfers? | Other terms |
|---|---|---|---|---|
| Plum | 4.4% | App | Yes | 1p minimum initial deposit. Rate includes a variable base rate of 3.36% and a fixed one-year bonus rate of 1.04%. |
| Moneybox | 4.2% | App | Yes, from other lifetime Isas. | £1 minimum initial deposit. Rate includes a variable 3.05% base rate and a fixed one-year bonus rate of 1.15%. |
| Tembo Money | 4.1% | App | Yes | £1 minimum initial deposit. Free mortgage advice for all savings account holders. Earn a 1% bonus on funds used when buying your first home with Tembo Mortgages before 30 September 2025. |
| Paragon Bank | 3.51% | Online | Yes, from other lifetime Isas. | £1 minimum initial deposit. Can be managed online, by post or by telephone. |
| Bath Building Society | 2.85% | Online or Branch | No | £1 minimum initial deposit. Once opened, the account can be managed online or by app. |
| Nottingham Building Society | 2.5% | Online | Yes, from other lifetime Isas. | £1 minimum initial deposit. Free mortgage advice available if using Lifetime Isa to purchase a home. |
| Skipton Building Society | 2.3% | Online | Yes | £1 minimum initial deposit. |
Table notes: last checked 9 September 2025. AER and terms are subject to change.
The table below gives an overview of all the stocks and shares lifetime Isas currently on the market, so you can compare and work out which might be the best option for you. The links go to provider websites.
As with all investments, there are risks involved, so you might get back less money than you put in.
For more detailed information, click on the list of providers below the table.
Please note that the information in this table is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of a provider before committing to any financial products.
| Provider | Accepts transfers in? | Fees | Minimum opening amount | Worth knowing |
|---|---|---|---|---|
| AJ Bell (a) | Yes | Vary according to which type of investment you choose. Custody charge of 0.25% on shares (max £3.50/month) and 0.25% on funds; charge per deal on buying and selling investments; buy and sell investments online from £1.50. | £250 lump sum or £25 direct debit | Accepts transfers from cash Isas and stocks and shares Isas as well as existing lifetime and help to buy Isas and matured child trust funds. |
| Hargreaves Lansdown (a) | Yes (but not from other Lifetime ISAs) | 0.25% annual account charge on funds (falling to 0.1% on the value between £1m and £2m, with no charge on the value over £2m). 0.25% annual charge on shares (capped at £45/year). May also be dealing charges for online, mobile app and telephone share dealing. | £100 lump sum or £25 direct debit | Has more than 3,000 funds to choose from, plus UK and overseas shares and investment trusts, bonds and ETFS. |
| Moneybox | Yes | £1 per month subscription fee; 0.45% platform fee (charged monthly); 0.45% currency conversion fee (US stocks); variable fund provider fees | £1 | The monthly subscription fee is waived for the first three months. Fee also waived for customers with £5k or more in a Moneybox Cash ISA and/or Simple Saver. |
| Nutmeg | Yes | Annual costs depend on which fund you choose and how much you have invested. Additional charges for investment fund costs and average market spread, which vary | £100 | Account must be opened and managed online or via mobile app. |
| One Family | Yes | 1.1% annual management charge | £250 lump sum or £25 direct debit | Only direct debit or debit card payments are accepted. Educational grants available for young people aged 15-19. |
| Policefriendly (Formerly Metfriendly - UK police officers, staff and family only) | Yes | 0.6% one-off entry costs; 0.15% portfolio transaction costs; 1.42% management costs | £1,200 lump sum or £100 per month | Formerly just for Metropolitan police officers but now for all serving, retired and former UK police officers or staff, and their immediate family. Receive a £50 Amazon.co.uk Gift Card when you open a new Lifetime ISA by 19th December 2025. Quote code AUTUMN25. |
| Tembo | Yes | 0.35% annual platform fee; 0.17% annual fund provider fee | £1 | Account must be opened and managed via Tembo's mobile app. |
Table notes: last checked 9 September 2025.
Who can open a lifetime Isa? Adults aged 18-39, although if you're opening one to help save towards a property, you'll need to be a first-time buyer (i.e. never owned a property before) if you're intending to buy the home before you turn 60.
What do I get? For every £4 you save, the government will add £1 up to a maximum of £1,000 every tax year until you turn 50 years old.
How much can I save? Up to £4,000 a year is eligible for the 25% bonus (you can add more but it won't receive a government contribution).
When is the bonus paid? The bonus is paid every month, so you benefit from compound growth (where you earn interest on your interest as well as the cash you've put in).
Can I invest in stocks and shares? Yes, you can invest in either cash or stocks and shares.
Does this sit within my overall Isa limit? Yes, your overall annual Isa limit is £20,000 in 2025-26 and will include any payments into a cash Isa, stocks and shares Isa, innovative finance Isa, or lifetime Isa.
Can I spend the money on whatever I like? Under the age of 60, no - you must use it to buy a first property worth up to £450,000. After age 60, you can spend the money as you see fit.
Are withdrawals tax-free? Yes (as with other Isas).
Are withdrawals penalty-free? It depends: if you use the money to buy a first property or withdraw after the age of 60, you won't be penalised. If you want to spend the money on anything other than your first property and you're under the age of 60, you'll be hit with a 25% penalty when you withdraw your cash.
Can I pass on my lifetime Isa to a partner? Yes, your spouse or civil partner can inherit the value of your lifetime Isa as an 'additional permitted subscription' (APS) allowance. Find out more in our guide to inheriting an Isa.
Find the right mortgage using the fee-free service provided by L&C Mortgages
Compare mortgagesIf you click on the link and complete a mortgage with L&C Mortgages, L&C is paid a commission by the lender and will share part of this fee with Which? Ltd helping fund our not-for-profit mission. We do not allow this relationship to affect our editorial independence. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Once you've chosen a lifetime Isa provider, you'll need to apply to open an account with it directly. It's usually easiest to do this online.
You'll need to provide details including your name, date of birth, National Insurance number, address and other contact information so the provider can check you're a UK citizen and of the right age to be eligible for the account. You might need to verify your identity and address at a later stage of the application.
As with a regular Isa, you can hold multiple lifetime Isas at once. However, you can only open and pay into one lifetime Isa in each tax year.
You can also transfer money across from existing Isas. Any money you move across from previous years' Isas won't affect your overall Isa limit for that year.
If you open a lifetime Isa you can still have a regular cash Isa, a stocks and shares Isa and an innovative finance Isa, as long as your overall contributions are within the annual Isa limit (£20,000 for the 2025-26 tax year).
As with all other Isas, your money grows tax-free.
Parents and grandparents can also pay into a lifetime Isa opened by their child or grandchild, which could be a useful part of inheritance tax planning.
If you save the maximum £4,000 a year from age 18-50 you'd receive £32,000 in government bonuses over the 32 years.
The bonus is paid on your contributions, not the overall amount saved. So, it doesn't matter what interest rate you earn if you open a cash lifetime Isa, or how your investment performs if you open a stocks and shares lifetime Isa, as the bonus is paid on what you put in.
You can put your lifetime Isa savings and bonuses towards a deposit on your first property or to help fund your retirement.
Here, we explain the different ways you can take money out of your lifetime Isa.
Once you hit 60 you can withdraw some or all of your money, including the government bonus, to spend as you see fit. Withdrawals are tax-free.
You can withdraw some or all of your money at any time after 12 months as long as you're using it to buy your first home, and not a buy-to-let property. The property must be based in the UK and not cost more than £450,000. Withdrawals are tax-free.
Lifetime Isas are limited per person, not per home - so if you're part of a couple, you can both open a lifetime Isa and benefit from the government bonuses before buying a property together.
Unlike with Help to Buy Isas (which are no longer open to new applicants), you can use both your lifetime Isa savings and the government bonus to put down a deposit once you've exchanged contracts. The Help to Buy Isa only pays the bonus after completion, so you can't use it as part of your initial deposit to secure the property.
If the purchase falls through, or you don't use the cash to buy your home within three months after the withdrawal, the money must be returned to the lifetime Isa by your solicitor.
If you're aged under 60 and withdraw money for any reason other than buying your first property, you will face a 25% penalty on the amount withdrawn.
This means you'll lose more than just the government bonus; you'll also lose 6.25% of your own money.
The only exception to this is if you're diagnosed with terminal ill health, in which case you can withdraw all of the funds (including the bonus) tax-free and penalty-free, regardless of age.
Officially, you are allowed to transfer your lifetime Isa between providers. This should take no longer than 30 days.
It's also possible to move money from a lifetime Isa to another type of Isa. However, this counts as an unauthorised withdrawal, meaning you'd have to pay the 25% penalty if you did this.
While lifetime Isas can offer a helpful boost to home ownership or retirement goals, they're not right for everyone.
As mentioned above, they have strict rules for withdrawal, and deviating from these could leave you with less than you put in.
Another thing to consider is the risk to future benefit entitlement. Unlike pension pots, balances held in lifetime Isas are counted towards the £16,000 savings limit for means-tested benefits. If you need to claim benefits in the future, a lifetime Isa balance of between £6,000 and £15,999 may reduce your means-tested benefit payments, while balances above £16,000 may make you ineligible.
If you think you might need to claim means-tested benefits in the future then the effect of a lifetime Isa balance on any future benefit claim is worth considering carefully.
For people already receiving Universal Credit, the Help to Save scheme offers an unbeatable government top-up of 50% and much easier access to your savings pot than you would have with a lifetime Isa.
Find the right mortgage product using the service provided by L&C Mortgages.
Help to Buy Isas are no longer available to new applicants, but if you have an existing account you can continue to save (and benefit from the 25% bonus) until December 2030.
This advice is for people who hold an existing Help to Buy Isa.
If you want to buy within the next year and haven't opened a lifetime Isa yet, stick with your Help to Buy Isa, as funds can only be withdrawn from a lifetime Isa after 12 months.
Otherwise, a lifetime Isa might be worth considering, as you can save more money and earn a bigger bonus.
You're also not limited by a monthly deposit cap: with the Help to Buy Isa you can only save £200 per month, but with the lifetime Isa you can add cash as a lump sum.
You can use a lifetime Isa bonus towards a more expensive property. With the Help to Buy Isa, you can only buy a house worth up to £250,000 (or £450,000 in London), while the lifetime Isa allows you to buy a home worth up to £450,000 anywhere in the UK.
You can transfer money from your Help to Buy Isa to a lifetime Isa, but this will count against the lifetime Isa contribution limit for that year.
You can also choose to open a lifetime Isa alongside a Help to Buy Isa. However, you can only use the government bonus from one of these accounts to buy your first home.