UK finance jargon - in plain English
A savings account with a 25% government bonus, designed for your first home or retirement.
A Lifetime ISA (LISA) lets you save up to £4,000 per tax year and receive a 25% bonus from the government, up to £1,000 per year. You must be aged 18 to 39 to open one, and you can contribute until you are 50. The money can be used to buy your first home (worth up to £450,000) or withdrawn tax-free from age 60. Withdrawing for any other reason triggers a 25% penalty, which effectively claws back the bonus and a small portion of your own contributions. The government has confirmed the LISA will be replaced by a new first-time-buyer-only account, expected around April 2028, though final details of the replacement are still being consulted on. Existing LISAs continue under current rules in the meantime.
You open a LISA at 25 and save £4,000 in year one. The government adds £1,000. You do this for five years, contributing £20,000 and receiving £5,000 in bonuses. When you buy your first home, that entire £25,000 (plus any growth) is available as a deposit.
The property cap is currently £450,000. If you buy a property above that price, you cannot use your LISA and will face the withdrawal penalty. Always check the current rules at gov.uk before relying on a LISA for your deposit.
Last updated: June 2026. Sources: HMRC / GOV.UK / Student Finance England / FCA where relevant.
People open a LISA without checking whether their target property will be under the £450,000 cap. If you end up buying above that limit, you cannot use the funds without being penalised, which means losing more than just the bonus.