Lifetime ISA rules for first-time buyers
Figures as of · First Home Calculator
The basic shape
A Lifetime ISA (LISA) is a savings account with a government top-up attached. Pay in up to £4,000 a tax year and the government adds a 25% bonus on top, paid monthly rather than at the end of the year. That contribution counts toward your overall £20,000 ISA allowance across all ISA types — it isn't extra room on top of it.
The bonus cap and the contribution cap line up: £1,000 is exactly 25% of £4,000, so paying in the full amount earns the full bonus. The account won't accept more than £4,000 in a tax year; anything beyond that has to go into another ISA type, within the overall £20,000 allowance.
Who can open one, and for how long
You need to be between 18 and 39 to open an account — that is, you must open one before your 40th birthday. Once it's open there's no age limit on keeping it or on withdrawing from it. The age limit that does keep applying is on paying in: you can keep contributing, and earning the bonus, up to age 50, not beyond.
Getting the bonus out without a charge
The two ordinary penalty-free reasons to withdraw are buying a first home under the property price cap below, or reaching age 60. Withdraw for anything else, at any other age, and a 25% charge applies — not to the bonus alone, but to the whole amount withdrawn, your own contributions included. The charge is also waived if you are terminally ill with less than 12 months to live.
A first-time buyer, for these purposes, is someone who has never owned or inherited a legal interest in a residential property anywhere in the world. On a qualifying purchase the money is released to your conveyancer rather than paid to you.
The charge maths: why it costs more than the bonus
Pay in £4,000 and the 25% bonus grows the pot to £5,000. Withdraw outside the penalty-free reasons and the 25% charge applies to that whole £5,000 — a charge of about £1,250, leaving roughly £3,750 back. That's less than the £4,000 originally paid in — a net loss of about £250, or 6.25% of the original contribution, even though the bonus itself was only 25%. The charge is applied to the bonus-inflated total, not just clawed back from the bonus, so it more than cancels the top-up you received — it also takes a slice of your own money.
The 12-month rule
An account has to be open for at least 12 months before a first-time-buyer withdrawal is allowed, counted from the first payment into it — which is why an account opened with a small first deposit starts the clock even if the real saving comes later — not from each later contribution, so it suits a purchase at least that far away rather than one already in progress.
The property price cap
A first-time-buyer withdrawal only works for a property up to £450,000, and the cap is inclusive — a property at exactly that price still qualifies. A purchase at £320,000 sits comfortably under it; one at £475,000 does not, and the LISA route isn't available for that purchase at all — not partially, not for the portion under the cap. The money would need to come out another way, taking the 25% charge, or wait until age 60.
Buying with someone else
Buyers purchasing together can each use their own LISA toward the same property — a couple buying together, for instance, can combine two accounts' worth of contributions and bonus. The £450,000 cap still applies once, to the property itself, not per buyer.
Where it fits against other options
An employer pension match is a separate top-up a LISA doesn't replace; the pension calculator shows what a match is worth. A LISA is narrower by design: a first home, or a second pot alongside a pension for later in life, not a general-purpose savings account. The First Home Calculator applies every rule above automatically — the annual cap, the bonus, the 12-month rule and the property price cap — while projecting how a deposit builds. The Money Planner can place a LISA alongside other goals and account types if you're weighing it against saving for something else at the same time. The property price cap and other figures above are current published rules and can change; check the official guidance before relying on them.