UK Lifetime ISA (LISA) Calculator — Bonus & Penalty

Lifetime ISA Guide

Lifetime ISA Basics

The Lifetime ISA (LISA) lets you save up to £4,000 per tax year and receive a 25% government bonus (up to £1,000/year). Eligibility: must be aged 18-39 to open. Can contribute until age 50. Funds can be used: to buy your first home (property price up to £450,000) or accessed from age 60 (penalty-free). The 25% bonus is added monthly by HMRC. Annual bonus maximum: £1,000 (on £4,000 contribution). Total lifetime bonus potential: £32,000 (if contributing maximum from age 18 to 50).

The Withdrawal Penalty

Withdrawing for any purpose other than first home purchase or age 60+ retirement incurs a 25% penalty on the full withdrawal amount. The penalty is 25% of the withdrawal, not 25% of the bonus — this means you lose more than just the bonus. Example: contribute £4,000, receive £1,000 bonus, total = £5,000. Withdraw early: penalty = 25% × £5,000 = £1,250. You receive £5,000 - £1,250 = £3,750 — less than your original £4,000 contribution. This means the LISA is only appropriate if you are confident

First Home Purchase Rules

Property price limit: £450,000 (unchanged since 2017 — has not kept pace with house prices in many areas). Must be your first home. Must use a mortgage (cannot buy with cash only). The LISA must have been open for at least 12 months before use. The conveyancer applies the LISA funds directly to the purchase — you cannot receive the cash and use it independently. The £450,000 limit affects affordability in London and the South East particularly — many first-time buyers in expensive areas cannot u

LISA vs Pension

For basic rate taxpayers, LISA and pension give effectively the same benefit: both give a 25% uplift. LISA: you contribute £4,000, bonus adds £1,000. Pension: you contribute £800 net, basic rate relief adds £200 gross (same 25% uplift per £1 contributed). For higher-rate taxpayers, pension is significantly better: pension gives 40% tax relief. LISA gives only 25%. A higher-rate taxpayer who contributes the equivalent into a pension reclaims an additional 20% via self-assessment — making pension