Best Lifetime ISA Providers (LISA) 2023

Yes. With cash Lifetime ISAs, under the Financial Services Compensation Scheme (FSCS) your money is protected up to £85,000 per banking institution should your provider go bust.

You are also protected up to £85,000 if you lose money because the provider of your stocks and shares LISA goes bust but this doesn’t protect you if you’re out of pocket because the companies you are invested in fail.

Anyone over 18 and under 40 who is a UK resident can open and pay into a Lifetime ISA (LISA). If you stop living in the UK you have to stop paying into it.

If you’re not a UK resident you can still open and pay into one if you’re a crown employee working overseas, such as you’re in the UK armed forces, or you’re the spouse or civil partner of one.

Only individuals can open Lifetime ISAs – there are no joint accounts. This means if you’re part of a couple you can each have one as long as you’re eligible.

You can only open one Lifetime ISA each tax year and pay into one, although you can have more than one over your lifetime.

There’s a cooling-off period of 30 days when you first take out the account during which you can close it without charge and won’t get the bonus. 

There’s no charge for your Lifetime ISA if you die.

You apply for a Lifetime ISA directly with your chosen provider, which is usually done online. You will have to supply details such as your date of birth, national insurance number and proof of address so the provider can make sure you’re eligible as well as proof of identity.

Help to Buy ISAs were available between 2015 and 2019 to help first-time buyers save for a deposit to buy a home worth up to £250,000, or £450,000 in London. Although you can no longer open a Help to Buy ISA, as they’ve been replaced by LISAs, if you already have one you can continue to save into it until November 2029.

As well as interest, you get a bonus of 25% of the amount you save into it from the government up to a contribution limit of £12,000, giving you a total bonus of up to £3,000. You solicitor or conveyancer claims the bonus for you once you’ve exchanged contracts on a property.

After an initial deposit of up to £1,000, every month you can pay a maximum of £200 into it (up to £2,400 a year) and add another £50 to your bonus. This means it would take a minimum of four-and-a-half years to get the full amount. You have to save at least £1,600 to qualify for a bonus.

You can save more in a LISA each year – as a lump sum if you choose – than in a Help to Buy Isa and get a bigger bonus. And as you are paid your LISA bonus every month, you can get interest or investment growth on it. You can buy a more expensive property outside London with a LISA too.

Unless you plan to buy a property within the next 12 months it’s worth transferring your Help to Buy ISA into a Lifetime ISA, although it will count towards your LISA limit for that year.

You can open a Lifetime ISA if you already have a Help to Buy ISA and pay into them both in the same tax year but you can only use the bonus from one of them to buy a home. So, if you use your Help to Buy bonus for a home you’ll then only be able to use the money in your LISA once you turn 60 (unless you pay a penalty to withdraw it early).

Alternatively, if you decide to use your LISA to buy a home you can either transfer your Help to Buy ISA into it first, transfer it to another ISA or take the money out. As you won’t be using it to buy a home you won’t get the bonus.

To transfer your Help to Buy ISA you need to fill out a transfer form with your new provider, which will organise the transfer for you. If you take the money out yourself it will lose its tax-free status and you’ll only be able to reinvest it into an ISA as part of your allowance for the current tax year.

Yes, it’s possible that the rules on Lifetime ISAs could change in the future to allow you to take money out without charge in other circumstances. There may also be changes to the tax rules around pensions. This means that whether a LISA suits you and when saving into a pension beats saving into a LISA may also change.

Because profits are tax free and the Government will top your LIfe up with essentially a free bonus based on 25% of your contributions. A Lifetime ISA helps you save for buying your first home or later life with a bonus from the government.

For investment Lifetime ISAs, AJ Bell has the lowest platform fee at 0.25% but the cheapest one for you will also depend on how often you plan to buy and sell investments as you also pay charges for each deal.

Yes, you must be at least 18 to open one and under 40. You must be a UK resident unless you’re a crown employee working overseas or the spouse or civil partner of one. To use a Lifetime ISA to buy a home you must be a first-time buyer, which means you have never owned a property anywhere in the world before.

If you don’t use the money in your Lifetime ISA to buy a home you have to wait until you’re 60 to withdraw money without charge (unless you’re terminally ill) but you can take it out if you pay a penalty.

You have to pay a penalty of 25% of the money you take out early.

You may be able to choose to reinvest any income you make from your investments rather than taking the money out with the aim of boosting your returns further.

Yes, you can open and contribute to one of each type of ISA every tax year.

No, but you and your partner can each open a Lifetime ISA and get the bonus.

Yes, you can use some of the money to buy a home and use the rest for your retirement once you turn 60.