Does Lifetime ISA Count Towards Your ISA Allowance?

Your £20,000 annual ISA allowance: what counts

You can pay up to £20,000 into all ISAs in a single tax year. The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. The £20,000 limit is unchanged from 2025/26. The government has said it stays at £20,000 until 5 April 2031. Inside that £20,000 you can mix:

• Cash ISA (earns interest, no investment risk)
• Stocks & Shares ISA (invests in shares, funds, ETFs)
• Lifetime ISA (sub-cap of £4,000 inside the £20,000)
• Innovative Finance ISA (peer-to-peer lending)

The LISA cap is the only sub-limit in 2026/27. The other ISA types share the rest of the £20,000 between them. For the wrapper itself, see the guide to how an ISA works. To learn who can open a LISA, read the Lifetime ISA explained.

How LISA contributions affect your overall allowance

Every £1 you pay into a LISA cuts your remaining ISA allowance by £1. Pay the full £4,000 LISA cap and you have £16,000 left for the other ISA types. HMRC adds the 25% government bonus on top. The bonus does not count towards the allowance. So the total cash in the wrapper can be £25,000 in a year (£16,000 in other ISAs + £4,000 personal LISA + £1,000 LISA bonus).

None of these numbers changed on 6 April 2026. The bonus arrives separately, usually a few weeks after each contribution. See when the government pays your LISA bonus.

Can you have a LISA and a Stocks & Shares ISA?

Yes. The LISA and the Stocks & Shares ISA are different ISA categories. You can pay into both in the same tax year. Your combined contributions cannot exceed £20,000.

From April 2024, you can also pay into more than one ISA of the same type in a tax year. For example, you could open two stocks and shares ISAs alongside a LISA and a cash ISA. The total must stay at or below £20,000. Not every provider supports this yet, so check before you split your money.

Splitting your allowance between LISA and Cash ISA

A common setup for first-time buyer savers is a £4,000 LISA and a £16,000 cash ISA. The LISA captures the maximum £1,000 bonus. It is held in cash to protect against short-term market falls. The remaining £16,000 sits in a cash ISA, where it earns interest tax-free.

For longer-term savers (10+ years), some choose to hold the LISA inside a Stocks & Shares LISA wrapper for higher potential growth. Others prefer the certainty of cash. The right choice depends on time horizon and risk appetite. Both are personal to you. For what the wrapper does with your money, see how a stocks and shares ISA works. For the tax side, read whether you pay CGT on shares in an ISA.

Realistically, most people in their late teens and twenties are nowhere near the £20,000 ceiling. So the split matters little, and the £4,000 LISA cap is the only limit that bites. Where it does matter is the year you buy: if a lump sum from family lands in March, the £4,000 LISA cap still applies to it. The rest has to go somewhere else.

The one provider rule (and the 2024 reform)

Before April 2024, you could open only one ISA of each type per tax year. The 2024 reform removed that limit for cash, stocks & shares, and innovative finance ISAs. It kept the limit for the Lifetime ISA. So:

• One LISA per tax year (still the rule)
• Multiple cash ISAs allowed per tax year (since 2024)
• Multiple stocks & shares ISAs allowed per tax year (since 2024)

Transfers between providers do not count as new contributions. So moving a LISA to a different provider in the same tax year does not break the one-LISA rule.

The cash ISA limit is changing on 6 April 2027

This does not affect the 2026/27 tax year. But it is coming, so it is worth knowing now. From 6 April 2027, the amount you can pay into a cash ISA drops to £12,000 a year if you are under 65. The overall ISA allowance stays at £20,000. Savers aged 65 and over keep the full £20,000 cash ISA limit from the tax year they turn 65.

The Lifetime ISA cap is not affected. It stays at £4,000 a year. What changes is how much of the remaining allowance can sit in cash rather than in investments. Related rules start on the same date. They include a flat-rate 22% charge on interest paid on cash held inside stocks and shares or Innovative Finance ISAs. They also ban transfers from a non-cash ISA into a cash ISA. Cash into non-cash is still allowed, and the over-65s are exempt from the transfer restriction. Wholly cash-like portfolios become ineligible. Only money market funds are allowed as partial cash-like holdings. The regulations were laid before Parliament on 14 September 2026 and take effect on 6 April 2027.

Separately, the government is consulting on a First Time Buyer ISA. It would be offered in place of the Lifetime ISA. The consultation closed on 18 August 2026. Nothing has been legislated yet, so the LISA rules described on this page are the ones in force.

Mistakes that cost people the bonus

• Opening two LISAs in one tax year. HMRC treats the second as void, and the bonus on its contributions is reclaimed.
• Paying more than £4,000 to a LISA. The provider returns the excess, and it earns no bonus. The LISA contribution limits guide explains this.
• Forgetting transfers count differently. Moving an existing LISA to a new provider is fine. Opening a new LISA at the new provider while the old one is still open is not.
• Mixing up the £20,000 with the £4,000. The LISA limit sits inside the £20,000. It is not on top of it.