cash stack icon

Best Lifetime ISAs

A Lifetime ISA is a type of tax-free savings account that allows you to save for retirement or your first home, or both. While it comes with a lot of restrictions, it has the benefit of a generous Government top-up.

The table below shows the Best Lifetime ISA Rates today. Start your comparison today.

Advertisement

Best Lifetime ISA rates

We found 7 PRODUCTS in total, of which 1 are EASY TO OPEN

Press to increase amount Press to decrease amount

We are searching our databases for your products...

  • Paragon Bank Cash Lifetime ISA - Issue 3
    AER
    3.51%
    Account Type
    Lifetime ISA
    Notice
    None
    Interest Paid
    Anniversary
    Go To Provider's Site
  • Moneybox Moneybox Cash Lifetime ISA
    AER
    5.00%
    Includes a bonus for 12 months
    Account Type
    Lifetime ISA
    Notice
    None
    Interest Paid
    Monthly
  • Tembo Tembo Cash Lifetime ISA
    AER
    4.30%
    Account Type
    Lifetime ISA
    Notice
    None
    Interest Paid
    Monthly
  • Bath BS Lifetime ISA (LISA)
    AER
    3.69%
    Account Type
    Lifetime ISA
    Notice
    None
    Interest Paid
    Yearly
  • Beehive Money Online Lifetime ISA
    AER
    3.30%
    Account Type
    Lifetime ISA
    Notice
    None
    Interest Paid
    Yearly
  • Skipton BS Cash Lifetime ISA Issue 7
    AER
    3.05%
    Account Type
    Lifetime ISA
    Notice
    None
    Interest Paid
    Anniversary
  • Newcastle BS Newcastle Cash Lifetime ISA (Issue 3)
    AER
    2.85%
    Account Type
    Lifetime ISA
    Notice
    None
    Interest Paid
    Anniversary
Depositor Protection

Eligible deposits with UK institutions are protected by the Financial Services Compensation Scheme (FSCS) up to a maximum level of protection of £85,000 per person per institution. All new savings or bank accounts provided to UK customers are now covered by the FSCS.

Disclaimer

All rates subject to change without notice. Please check all rates and terms before investing or borrowing.

Provider Links

‘Go To Provider's Site’ links are where we have an arrangement with a provider so you can move directly from our site to theirs to view more information and apply for a product. We also use ‘Speak to A Broker’ links where we have an arrangement with a preferred broker to move you directly to their site. Depending on the arrangement we may receive a modest commission either when you press a 'Go To Provider's Site' or 'Speak To A Broker' button, when you call an advertised number or when you complete an application following a link from our website.

Favourites

By clicking the heart icon next to each product will mark that product as a favourite. A product will be remembered as a favourite until you deselect it or for 14 days (assuming you have functional cookies enabled). There is an option to filter/sort by ‘Favourites First’ which will bring your favourites to the top of the chart.

Lifetime ISAs explained

What is a Lifetime ISA?

Lifetime ISAs (LISAs) were first introduced by the UK Government in 2017 as a replacement for the Help to Buy ISA. Available to those aged 18 to 39, this type of ISA is specifically designed for saving tax-free towards purchasing a first home or for retirement.

Their main appeal is that the Government adds a 25% bonus on balances held in a Lifetime ISA. This means if you were to pay in the maximum of £4,000 per tax year, you could earn an additional £1,000 on this amount.

How do Lifetime ISAs work?

There are two main types of LISA to choose from: cash Lifetime ISAs and stocks and shares Lifetime ISAs.

With a cash LISA, your provider pays interest on any funds deposited. This is similar to other types of cash ISAs and traditional savings accounts.

In contrast, with a stocks and shares LISA, you’d be investing your money in the stock market. While this presents the possibility of greater returns, you must be aware that the value of your investment can go down as well as up.

Lifetime ISA rules

Regardless of which type you opt for, there are some common rules which apply to all Lifetime ISAs:

  • Only those aged between 18 and 39 can open a LISA, but you can continue paying into this account until you turn 50.
  • You can only deposit up to £4,000 in a LISA each tax year – this means the 25% Government bonus is capped at £1,000 per year.
  • The Government bonus is paid into your account four to 10 weeks after making a deposit meaning, like any other balance, it will earn interest over time.
  • Any amount deposited in a LISA will count towards your £20,000 annual ISA allowance. However, the Government bonus doesn’t count towards this limit.
  • While it’s possible to hold multiple LISAs, you can only open and pay into one of these accounts during the 2024/25 tax year.
  • Withdrawals from a LISA will incur a 25% charge; this also applies when transferring a LISA to a different type of ISA.

 

Buying your first home with a Lifetime ISA

When using a LISA to buy your first home, there are some key factors to bear in mind:

  • You must be a first-time buyer. This means you can’t already own a property anywhere in the world, including buy-to-let or commercial properties.
  • After making your first payment into a LISA, you must wait at least 12 months before using the funds in the account to purchase a property.
  • The property you’re looking to buy must be located within the UK, worth less than £450,000 and purchased with a mortgage. You must also intend to live in the property, although it may be possible to rent it out at a later date.
  • If you and a partner are purchasing a property together, you can both use LISAs and still receive the Government bonus, so long as you are both first-time buyers.
  • However, if you hold both a Help to Buy ISA and a LISA, you can only receive the Government bonus from one of these accounts when buying your first home. It’s possible to transfer your Help to Buy ISA to a LISA – read our guide on transferring ISAs.

 

Saving for retirement with a Lifetime ISA

Using a LISA to save towards your retirement is relatively straightforward. Once you turn 60, you can make partial or full withdrawals from your account without incurring any fees. Any money left in your LISA will remain tax-free. Depending on your provider and the type of LISA, these funds may also continue to earn interest or can remain invested in the stock market.

 

 

Receive the latest news, straight to your inbox

All of our newsletters are available free by email to all Moneyfactscompare.co.uk users.

Send me Weekend Moneyfactscompare, Savers Friend, Companies Friend and selected third-party offers.

How many Lifetime ISAs can I have?

As previously mentioned, there is no limit on the amount of LISAs you can hold. However, under current ISA rules, you can only open and pay into one LISA in the 2024/25 tax year.

When can you withdraw from a Lifetime ISA?

If you’re using a LISA to buy your first home, it’s important you don’t withdraw the funds in your account, even if you’re ready to make a purchase. This would incur a 25% charge on the amount withdrawn and could result in you losing your tax-free wrapper. Instead, you’ll need to use a conveyancer or solicitor to act on your behalf, as your LISA provider will pay the funds to them directly.

Meanwhile, if you’re saving for later life with a LISA, your savings can be partially or wholly withdrawn without incurring any fees once you turn 60. It’s possible to make withdrawals outside of these parameters, but doing so will result in a 25% charge.

Is paying into a Lifetime ISA smarter than paying into a pension?

Following its introduction, the Government stressed that “the Lifetime ISA is designed to be a complement to pensions saving, not a replacement”. Pensions are a longer-term form of later-life saving which come with their own set of advantages and disadvantages.

Whether it’s smarter to pay into a Lifetime ISA or your pension will depend on your personal circumstances, including your age, your employment status and the level of access you’ll need to your savings. Read our ISA or pension guide to learn more. 

Which banks and providers offer Lifetime ISAs?

Our dedicated chart offers a comprehensive overview of LISA products on the market and their providers. You’ll find products from the likes of Moneybox and Paragon Bank, as well as building societies such as Skipton BS and Newcastle BS.

How do I open a Lifetime ISA?

If you’re aged 18 to 39, you can apply for a LISA directly with a provider. Depending on which product and provider you choose, this can either be done online, in branch, over the phone, by post or using a mobile banking app.

As part of this process, you’ll need to supply your personal details; you may also be asked for photo ID or proof of address. Like most savings accounts, you’ll also need to be able to meet the minimum deposit specified by your LISA provider. For more information on product-specific opening requirements, view ‘further details’ next to an account on our chart.

 

Image of Ella Mower

Ella Mower

Senior Content Writer

ISA guides

More guides
guides icon
What is the 2024/25 ISA allowance?
...and how does it work?

Find out the ISA rules and limits for the 2024/25 tax-year, and how they may impact your savings.

Find out the ISA rules and limits for the 2024/25 tax-year, and how they may impact your savings.

Read More
guides icon
What is ISA season and why does it matter for your savings?

ISA season takes place throughout March and April as one tax-year ends and another begins. Find out more about what ISA season means for your savings and when you can access the best ISA rates with our dedicated guide.

ISA season takes place as one tax-year ends and another begins. Find out what ISA season means for your savings and when you can access the best ISA rates..

Read More
guides icon
How to transfer an ISA

Are you looking to move or transfer the funds in your ISA? Find out everything you need to know about ISA transfers with our complete guide.

Are you looking to move or transfer the funds in your ISA? Find out everything you need to know about ISA transfers with our complete guide.

Read More
guides icon
The rules on inheriting ISAs

Did you know that you can inherit your spouse's/civil partner's ISA savings? This guide explains the rules on inheriting ISAs and the important things you need to know.

What you need to know about claiming and investing an inherited ISA, and retaining its tax-free status.

Read More

ISA News

news icon
The best cash ISA rates this week

1st October 2024

Each week the Moneyfactscompare.co.uk content team round up and discuss the very best ISA rates available in the UK. Compare and apply today.

Savers continue to build up their ISA pots as leading rates stay largely unchanged.

Read More
news icon
Inflation holds at 2.2% in August

18th September 2024

Air fares made the largest upwards contribution as average motor fuel prices fell. Find out more.

Air fares made the largest upwards contribution as average motor fuel prices fell.

Read More
news icon
Fixed and variable savings rates fall further

17th September 2024

Savings and ISA rates fell across the board throughout August, with variable and fixed rates both seeing notable drops. Find out what this means for you.

Savings and ISA rates fell across the board throughout August, with variable and fixed rates both seeing notable drops.

Read More
news icon
What happened to the British ISA?

12th September 2024

With plans for a new British ISA having reportedly been scrapped under the new Labour Government, how can you invest in UK equities?

Find out how you can still invest in UK equities.

Read More
news icon
Cash ISAs resist falling rates

21st August 2024

Average fixed ISA returns maintained stability, and even saw month-on-month increases in August.

Average fixed ISA returns maintained stability, and even saw month-on-month increases in August.

Read More
news icon
New two and five-year British Savings Bonds now on sale from NS&I

7th August 2024

This is the first time in 15 years two and five-year bonds from the Government-backed brand have been on general sale.

This is the first time in 15 years two and five-year bonds from the Government-backed brand have been on general sale.

Read More
news icon
Reeves to tackle £22 billion overspend as Autumn Budget announced

31st July 2024

The Chancellor stated the Budget will aim “to fix the foundations of our economy”.

The Chancellor stated the Budget will aim “to fix the foundations of our economy”.

Read More
news icon
‘Optimistic view’ for savings market as number of deals hits 12-year high

19th July 2024

The number of savings products and providers is on the rise while many average savings and ISA rates also increased month-on-month.

The number of savings products and providers is on the rise while many average savings and ISA rates also increased month-on-month.

Read More
news icon
General Election 2024: What do the main parties have in store for your personal finances?

1st July 2024

With the UK General Election taking place later this week (Thursday 4 July), we examine how some of the main parties’ policies could affect your personal finances if they were to form the next Government.

Find out what the Conservative and Labour Parties have planned for your taxes, savings and pensions.

Read More
news icon
Savings rates on the rise amid ISA decline

21st June 2024

Average savings rates rise across various sectors, widening the gap with ISA counterparts.

Average savings rates rise across various sectors, widening the gap with ISA counterparts.

Read More
news icon
Bank of England holds base rate at 5.25% as General Election looms

20th June 2024

There was no change despite the Bank of England meeting its 2% target for inflation.

There was no change despite the Bank of England meeting its 2% target for inflation.

Read More
news icon
Major banks paying below-average savings rates

14th June 2024

Several of the major high street banks are paying below-average rates on their savings accounts and ISAs, despite reviews from the FCA and the Treasury.

Several of the major high street banks are continuing to pay below-average rates on their savings accounts and ISAs.

Read More
news icon
Top tax-free returns prove resilient beyond ISA season

14th June 2024

Trading 212 is the latest digital provider to offer a top rate.

Trading 212 is the latest digital provider to offer a top rate.

Read More
news icon
Savers deposit record sums in cash ISAs in April

3rd June 2024

After interest rates rose over the past year, savers deposited a record £11.7 billion in ISAs in April 2024 to take advantage of their tax-free allowance.

Savers deposited a record £11.7 billion in ISAs in April 2024 to take advantage of their tax-free allowance.

Read More
news icon
Fixed bonds and ISAs fall month-on-month

20th May 2024

Average rates on fixed bonds and ISAs fell in the month to May while easy access and notice rates remained more stable.

Average rates on fixed bonds and ISAs fell in the month to May while easy access and notice rates remained more stable.

Read More
news icon
Bank of England base rate remains at 5.25% - a blow to borrowers?

9th May 2024

The latest latest decision comes as average mortgage rates continue to rise steadily.

This latest latest decision comes as average mortgage rates continue to rise steadily.

Read More

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.