Lifetime ISA Explained: Age Limits, Eligibility and How a LISA Works

What Is the Age Limit for a Lifetime ISA?

The age limit for opening a Lifetime ISA is 40. You must be 18 or over and under 40 on the day you open the account. Once it is open, you can keep paying in and earning the 25% government bonus until you turn 50. These are the only two age caps that matter. Neither can be waived.

The practical takeaway: the 40th birthday is a hard limit. If you are 39 and might want a LISA one day, opening one before that birthday keeps the option open. A LISA opened at 39 can still be paid into for another decade. The same logic applies to the 12-month rule in the LISA withdrawal rules. The account has to have been open for at least 12 months before you can use it towards a first home.

Am I Eligible for a Lifetime ISA?

To open a Lifetime ISA you need to be 18 or over, under 40, and a UK resident. That is the whole test for opening one. You do not have to be a first-time buyer or be employed. HMRC sets no minimum income or minimum deposit.

Whether you can use the money without a charge is a separate question, and this is where most people trip up. The three charge-free routes have their own conditions:

• First home: you must never have owned a home anywhere in the world, the property must cost £450,000 or less, you must buy with a mortgage, and the LISA must have been open for at least 12 months.
• Age 60 or over: no conditions at all. You can take the money for any reason.
• Terminal illness: available at any age, on diagnosis.

So you can be eligible to open a LISA and still be unable to use it for a house. For example, this applies if you once inherited a share of a property. Anything outside those three routes triggers the 25% withdrawal charge. The charge is explained in full further down.

What Is the Annual Lifetime ISA Allowance?

The annual Lifetime ISA allowance is £4,000 in the 2026/27 tax year. That is the most you can pay in yourself between 6 April 2026 and 5 April 2027. It earns a maximum government bonus of £1,000. The allowance did not change on 6 April 2026. The government has said the £4,000 limit stays the same until 5 April 2031.

Two things catch people out. First, the £4,000 is not a separate pot. It sits inside your overall £20,000 ISA allowance. Paying the full £4,000 into a LISA leaves £16,000 for everything else. More detail is in how a LISA counts towards your £20,000 ISA allowance. Second, unused LISA allowance does not roll over. If you put in only a small amount this tax year, next year’s cap is still £4,000. The part you did not use is gone. The full set of rules is in the guide to Lifetime ISA contribution limits.

How Does the LISA 25% Government Bonus Work?

The government adds 25% on top of every contribution you make to a Lifetime ISA, up to a maximum of £1,000 per tax year. Put in £4,000 and the government adds £1,000, giving you £5,000 in total. HMRC pays the bonus into your LISA automatically, after your provider claims it from HMRC. HMRC does not publish a payment date. For exact month-by-month dates, see when is the LISA bonus paid.

Because it arrives on a monthly claim cycle, not instantly, it often shows as ‘pending’ for a few weeks first. The guide to how the LISA government bonus works covers the mechanics. Here’s how the numbers add up:

The most you can pay in is £4,000 per tax year. That earns a maximum bonus of £1,000. This counts towards your overall £20,000 annual ISA allowance. If you open a LISA at 18 and max it out every year until you turn 50, that adds up to somewhere between £32,000 and £33,000 in government bonuses alone. Which end you land on depends on where your birthday falls in the tax year. Contributions stop on your 50th birthday, not at the end of that tax year.

The Full LISA Rule Set, in One List

This lists every rule that governs a Lifetime ISA, in the order you are most likely to hit them. The age rules control whether you can open one. The property rules control whether you can spend it on a house. The age 60 rule is the backstop for everything else.

• Age to open: You must be aged 18 to 39 on the day you open the account. Miss the deadline and you cannot open one at all.
• Age to contribute: You can keep paying in until your 50th birthday. After that the account stays open and continues to earn, but no more contributions or bonuses.
• First-time buyers only: To use the LISA for a property purchase, you must never have owned a home anywhere in the world. If you have, the property route is closed to you.
• Property price limit: The home must cost £450,000 or less. If you buy with a partner who also has a LISA, you can both use your bonuses. Both of you must be first-time buyers. It is worth reading this alongside how Stamp Duty works, because first-time buyer relief has its own separate price thresholds.
• Mortgage required: You cannot use a LISA to buy a property outright with cash. You must be taking out a residential mortgage.
• 12-month rule: The account must have been open for at least 12 months before you can use it to buy a home. Open one early even if you only put a small amount in, the clock starts ticking from the day you open it.
• Retirement withdrawal: From age 60, you can withdraw everything, contributions, bonuses, and any growth, tax-free, for any reason.

If you withdraw for any other reason before age 60, except for terminal illness, a 25% government withdrawal charge applies to the amount you withdraw. The charge is based on that amount, bonus included, not just your own contributions. So you can end up with less than you originally saved.

How to open a Lifetime ISA

Opening a LISA takes about ten minutes online. You apply directly with a LISA provider, not with HMRC. The biggest choice is between a Cash LISA (earns interest, no investment risk) and a Stocks & Shares LISA (invests in funds, can grow more over time but can fall in value).

The main UK LISA providers as of 2026 are Moneybox, AJ Bell Dodl, Hargreaves Lansdown, Nutmeg, Beehive Money, Newcastle Building Society, Tembo, and Skipton (cash only). Rates and fees vary, so it pays to compare. MoneyHelper’s LISA guide keeps a current list.

To apply you typically need:

• A UK address and a National Insurance number
• Proof of identity (passport or driving licence)
• A debit card or bank account for funding
• To be aged 18 to 39 on the day you open the account

Once approved, you can pay in any amount up to £4,000 per tax year. Most providers let you set up a monthly direct debit. £333.33 a month comes to £3,999.96 a year, just under the £4,000 cap. HMRC adds the 25% bonus monthly, with no action needed from you. For a step-by-step on the bonus timing, see when the government pays your LISA bonus.

Is the Lifetime ISA still available in 2026?

Yes. The Lifetime ISA is still open to new applicants in the 2026/27 tax year. HMRC is still paying the 25% government bonus on contributions. Nothing about the account changed on 6 April 2026. The annual limit is still £4,000. The maximum bonus is still £1,000. The property cap is still £450,000. The early withdrawal charge is still 25%.

The 6 April 2026 tax year reset opened a fresh £4,000 LISA contribution allowance. If you have not opened one yet, and you are 18 or over and under 40, you can still apply today.

One thing is worth knowing if you are weighing this up now. On 22 June 2026 the government published a consultation on a new First Time Buyer ISA. It proposes offering the FTB ISA in place of the Lifetime ISA. The consultation closed on 18 August 2026. As proposed, the FTB ISA would pay its bonus at the point of purchase. It would have no withdrawal charge and no upper age limit. None of this is law yet. The bonus rate and limits are due to be announced at a future fiscal event, and no start date has been set. The LISA can still be opened until the new product is available. Existing LISA holders can carry on saving under the current rules.

Do you earn interest on a Lifetime ISA?

It depends which type you hold. A Cash LISA earns interest at a rate the provider sets. The rate is typically 3-5% AER as at 2025/26, paid monthly or annually into the account. A Stocks & Shares LISA does not pay interest. But the investments held inside it can grow through capital appreciation, dividends, and bond interest.

Either way, all returns are exempt from UK Income Tax, Dividend Tax and Capital Gains Tax while the money stays inside the LISA. The 25% government bonus is paid on top of whatever the account earns. For a deeper breakdown of cash interest and investment growth, see do you earn interest on a Lifetime ISA.

Do you pay tax on a Lifetime ISA?

No, not while the money is inside the LISA, and not on qualifying withdrawals. Like other ISAs, a Lifetime ISA is a tax wrapper set out in law. Interest, dividends and capital gains are exempt from HMRC tax. Withdrawals for a first home or after age 60 are also tax-free.

The only payment HMRC takes from a LISA is the 25% withdrawal charge. It applies if you take money out for anything other than a first home, terminal illness, or after reaching age 60. Strictly, it is a charge, not a tax. But it has the same effect. The 25% charge applies to the amount you withdraw, so taking out the whole pot means the charge applies to the whole balance, which is your contributions plus the bonus. So an early withdrawal can leave you with less than you paid in. See LISA withdrawal rules for full details.

Is a LISA Better Than a Regular Savings Account?

For a first home purchase under £450,000, a Lifetime ISA beats any regular savings account. No savings product offers a guaranteed 25% bonus on deposits. For any other savings goal, a regular savings account or cash ISA is better. Withdrawing from a LISA for an ineligible reason triggers a 25% penalty. That penalty can leave you with less than you put in.

For a first home purchase under £450,000: A LISA wins easily if you’re under 40. No savings account offers a guaranteed 25% on your deposits. Even if the LISA’s interest rate is a little lower than the best instant-access account, the bonus far outweighs the difference.

For anything else: A regular savings account or cash ISA is better. The LISA is locked in. If you withdraw early for the wrong reason, you pay the 25% penalty and may get back less than you put in.

A common pattern is an easy-access savings account running alongside the LISA, not instead of it. The LISA money is ring-fenced for the purchase and carries the withdrawal charge. The easy-access pot has no charge and is there if life gets in the way. For the wider context on how ISAs fit together, start with how an ISA works. If you already hold an older first-time-buyer account, the LISA versus Help to Buy ISA comparison sets out which bonus does what.