What is Lifetime ISA? UK Definition 2026/27
Quick Answer
ISA with 25% government bonus for first home purchase or retirement.
Definition of Lifetime ISA
A Lifetime ISA (LISA) is available to 18-39 year olds, with a £4,000 annual contribution limit. The government adds a 25% bonus (up to £1,000/year). Funds can be used tax-free for a first home (up to £450,000) or from age 60. Withdrawing for other reasons incurs a 25% penalty, which means losing more than the bonus.
Lifetime ISA — Key Facts for 2026/27
| Annual limit | £4,000 |
| Government bonus | 25% (up to £1,000) |
| Age to open | 18-39 |
| Property limit | £450,000 |
How Lifetime ISA Works — Example
- 1Annual contribution: £4,000
- 2Government bonus: £1,000
- 3Total after 4 years: £20,000
- 4Used for first home deposit
- 5No penalty, full amount available
How Lifetime ISA Affects Your Tax
The LISA offers a guaranteed 25% return via the government bonus - excellent for first-time buyers or retirement savings. The 25% withdrawal penalty makes it unsuitable if you might need funds for other purposes.
Official HMRC Guidance on Lifetime ISA
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Lifetime ISAFrequently Asked Questions about Lifetime ISA
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.