Our picks of the best Cash and Stocks & Shares LISAs
Lifetime ISAs are a great way to save up for either your first home or towards your retirement as you get a 25% boost from the government. Here are some of the top-paying accounts at the moment.
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What is a Lifetime ISA?
A Lifetime ISA is a type of savings account that lets you save for your first home or retirement. With a LISA, you can deposit up to £4,000 per year and you’ll get a cheeky little 25% added by the government. Who doesn’t love a bit of free money? We have more on how they work and some of the account restrictions in our full guide. You can get two types of LISA: Cash and Stocks and Shares.
Best Cash Lifetime ISAs
Cash LISAs work the same as Cash ISAs, as you save up cash into them and earn a set rate on it. You can also sometimes earn interest on uninvested cash within a Stocks and Shares ISA, which we’ve also listed here.
There aren’t many Cash LISAs on the market, but here are some of the top-paying ones available.
Uninvested cash
Stocks & Shares LISAs don’t have an interest rate – instead, you invest your money into stocks or funds to attempt to earn even more on your initial deposit, although that’s not guaranteed.
You can broadly get two types of Stocks & Shares LISAs — ones where you’re fully in charge of your investments and ones where you’re offered a range of “ready-made” portfolios to choose between. You can sometimes get a mix of the two.
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What can you do with a Lifetime ISA?
A Lifetime ISA is a type of Individual Savings Account (ISA) and can be used to save up for either your first home or your retirement. You can choose whether you want to save cash or invest your savings in the Lifetime ISA, or you can do a mixture of the two.
How does the 25% boost work?
You get a 25% boost added to your Lifetime ISA monthly based on how much you deposited that month. You can get a maximum of £1,000 added each year, so if you open a Lifetime ISA at 18 and pay in every year until you’re 50, you can get more than £30,000 added by the government.
Lifetime ISA rules
There are restrictions to the use of the Lifetime ISA, including how old you need to be to get one, how much you can contribute and limits to withdrawals you can make.
Age
You have to be between 18 and 39 to open a Lifetime ISA and make your first payment into it. You can pay into a Lifetime ISA until you’re 50.
Contributions
You can contribute up to £4,000 in each tax year, which comes out of your annual ISA allowance. The government will add 25%, so for every £4,000 you add, you get £1,000 added.
You can only pay into one Lifetime ISA within each tax year, however, you can have multiple different ones if you want to, so you can start a new one or switch each tax year.
Withdrawals
You can only withdraw for one of two reasons: buying your first home or retirement. For your first home, you can withdraw money from your Lifetime ISA to buy a home worth up to £450,000. You can do this 12 months after your first payment. You can only withdraw after the age of 60 if you’re using it for retirement.
If you withdraw before age 60 for anything other than your first home, then a 25% early withdrawal charge will be deducted.
There are special circumstances that let you withdraw your Lifetime ISA if you are terminally ill with less than 12 months to live.