The Lifetime ISA Explained
Including FAQs

Like all types of ISA, you’ll be able to use your ISA allowance, which for the current tax year is £20,000, to put money away totally tax-free. In fact, you can save up to £4,000 per tax year into your LISA. One of the main draws of this account is the generous 25% Government bonus you can earn on your savings. So, if you put away the max £4,000, you’ll earn a £1,000 bonus on top every tax year. You’ll earn interest on any savings too. A word of warning though: if you take out the money before retirement age (60) and aren’t using it to buy your first home, there’s a 25% Government charge on your withdrawal which means you could get back less than you put in. It’s also worth knowing that you can’t use the funds for a home purchase until you’ve held the account for at least 12 months without the 25% Government charge too. This is to encourage you to save for longer periods of time.

Tax-free savings accounts are simple, really: with accounts like these you won’t have to pay tax on the interest you earn. There’s also a cap on how much you can add each tax year, depending on your circumstances, and keep in mind that the tax rules around ISAs could change.

If you take out your LISA savings for pretty much any reason other than buying your first home or retiring at age 60, you’ll likely have to pay a 25% Government charge on the withdrawal. If you’d prefer an account where you can dip in and out of your savings, you could try one of our easy access savings accounts instead.

Students over the age of 18 are definitely able to open a Lifetime ISA and if they’re willing to not touch their Lifetime ISA savings it can be a great head start on first home savings for after university or college. Due to the 25% Government withdrawal charge it wouldn’t be advisable to open a Lifetime ISA if you were just going to withdraw your savings when you needed them as you’d get back less than you put in. Having an easy access account could be useful if you want accessible savings as a student. We offer that type of account so check them out!

There’s a tax-free interest rate of 0.50%, however this may change. You’ll get this on top of the Government bonus.

We will pay your interest free of UK income tax. Your tax treatment will depend on your individual circumstances and may be subject to change in the future. The tax treatment of ISAs may also change. AER stands for Annual Equivalent Rate. It shows what the interest rate would be if the interest was reinvested in the account each year. Interest rates are variable unless otherwise stated.

As long as you’ve had the account for 12 months or longer, you can take money out when you're ready to buy your first home, from the age of 60 or in case of terminal illness (we know this is a sensitive topic, so talk to us to learn more). If you take money out for pretty much any other reason, you’ll likely be charged a 25% Government fee on the withdrawal.

You can check over our keyfacts and all the important bits like terms and conditions. You can talk to BeeBot for more info or take a look at the Government’s website.