Lifetime ISA (LISA) Calculator
See what your Lifetime ISA could be worth for a first home, including the 25% government bonus of up to £1,000 a year and the £450,000 property price cap.
| Total paid in | £23,000 |
|---|---|
| Government bonus | £4,500 |
| Growth | £2,449 |
| Tax | None |
| Value when you buy | £29,949 |
You are paying in £3,600 a year, so the government adds £900. Paying in another £400 a year would earn £100 more. The allowance does not carry forward, so a year's unused allowance is gone for good, and so is the bonus on it.
- What you paid in
- Government bonus
- Growth, all tax free
After 5 years the Lifetime ISA reaches £29,949. Of that, £4,500 is government bonus and £2,449 is growth, so £6,949 of it is money you never paid in.
| Year | Value | Paid in | Bonus | Growth |
|---|---|---|---|---|
| 0 | £5,000 | £5,000 | £0 | £0 |
| 1 | £9,404 | £8,600 | £600 | £204 |
| 2 | £14,244 | £12,200 | £1,500 | £544 |
| 3 | £19,228 | £15,800 | £2,400 | £1,028 |
| 4 | £24,362 | £19,400 | £3,300 | £1,662 |
| 5 | £29,949 | £23,000 | £4,500 | £2,449 |
Information
A Lifetime ISA grows in three ways rather than two: the money you pay in, the 25% the government adds on top, and the return the whole lot earns. The chart above splits the pot into the three, so you can see how much of your deposit you never paid for. This page is about saving for a first home, which is what most Lifetime ISAs are for.
The bonus. The government adds 25% of everything you pay in, up to £1,000 a year, on the first £4,000. It is paid whether you save into cash or into investments, it lands roughly a month after each contribution, and it earns interest or growth from then on just like your own money. Nothing inside the account is taxed, and there is nothing to declare. The £4,000 sits inside your £20,000 ISA allowance rather than beside it, so paying in the full amount leaves £16,000 for every other ISA you hold.
Who can open one, and until when. You have to be between 18 and 39 to open a Lifetime ISA. Once open you can pay in until you are 50, and the account carries on growing after that. If you are 40 or over and do not already have one, you have missed it: this page will still project an account you already hold, but it will not add a bonus to one you could not open.
The £450,000 cap, and the 25% charge. A Lifetime ISA comes out penalty-free for exactly two things: a first home costing £450,000 or less, and turning 60. Anything else costs a 25% charge on the whole pot. That charge is not the bonus reversed: it applies to your contributions and your growth too, so it takes back more than the bonus gave. Pay in £4,000, receive £1,000, and cashing out early leaves you with £3,750. The cap is on the price of the home, not on your savings, and it has not moved since 2017.
What's simplified. One flat return is held for the whole term, whereas a cash Lifetime ISA rate moves with the base rate and a stocks and shares one rises and falls with the market. Platform and fund fees are not modelled. The contribution is held flat, and the figures are in future pounds, not adjusted for inflation, which cuts both ways when you are racing a house price. This page also assumes you are a first-time buyer, that your account will have been open at least 12 months when you buy, and that you are buying with a mortgage, all of which the rules require and none of which this page checks. Open the full planner to model a variable return, fees, a rising contribution, and your Lifetime ISA in today's money.
FAQ
- How much does the government actually add to a Lifetime ISA?
25% of everything you pay in, on up to £4,000 a tax year, so up to £1,000 a year of free money. It is paid roughly a month after each contribution and then earns growth like the rest of the pot. The allowance runs 6 April to 5 April and does not carry forward, so any part of the £4,000 you have not used by 5 April is gone, and so is the bonus on it.
- What happens if the house I want costs more than £450,000?
You cannot use the Lifetime ISA for it without paying the 25% withdrawal charge. The cap is on the price of the property, not on your savings, there is no taper, and it is the same everywhere in the country including London. It has not moved since Lifetime ISAs launched in 2017. Enter the price above and this page shows you exactly what the charge would cost.
- If the bonus is 25% and the charge is 25%, do they cancel out?
No, and this is the most misunderstood thing about the product. The bonus is 25% of what you pay in; the charge is 25% of the whole pot, including the bonus and the growth. Pay in £4,000, receive £1,000, and the pot is £5,000. Withdraw it and the charge is £1,250, leaving £3,750. You put in £4,000 and got back £3,750, so the charge took the bonus and 6.25% of your own money with it.
- Can I open a Lifetime ISA if I am 40 or over?
No. You have to open one between 18 and 39. If you opened one before you turned 40 you can keep paying in until you are 50, and the bonus keeps coming until then. If you are 40 or over with no Lifetime ISA already, this is not available to you, and this page will show a projection with no bonus if you enter that situation.
- Does the £4,000 come out of my £20,000 ISA allowance?
Yes. The £4,000 sits inside the £20,000, it does not sit beside it. If you pay the full £4,000 into a Lifetime ISA you have £16,000 left for every other ISA you hold. The ISA calculator covers what happens to that £16,000.
- What if I never buy a house?
The money is not lost, but it is fenced in. You can leave it until you are 60, at which point it comes out penalty-free and is yours for anything. Take it out before then for anything other than a qualifying first home and the 25% charge applies. Over a short term that can leave you with less than you paid in; over a long one your growth may outrun it. This page shows you which, for your numbers.
- Should I use a Lifetime ISA or a pension for retirement?
This page will not tell you, and it does not try: it is scoped to buying a first home, which is what most Lifetime ISAs are for. The honest comparison depends on your tax rate now and later, whether your employer matches pension contributions, and when you need the money, which is more than a calculator can see. The full planner models both alongside the rest of your finances, which is where a question like that can actually be answered.
- Does this account for inflation?
No. The figures are in future pounds, so the pot buys less then than the same number would buy today. That cuts both ways here: your deposit grows, and so does the price of the house you are saving for. The full planner shows your money in today's money as well as future pounds.
Sources
- Lifetime ISA (GOV.UK)
Disclaimer
Not financial advice. The figures above are a projection from the inputs and assumptions you provided. What you actually end up with depends on the rate your Lifetime ISA pays, which can be cut at any time, or on what markets actually do, which nobody knows; on what you actually pay in; on whether you buy at all; and on future rules, including the £450,000 cap, which is set by the government and could change. Investment returns are not guaranteed and you can get back less than you put in. Check your provider's own figures and consult a qualified adviser before making a decision based on these numbers.
