# How does the Lifetime ISA work?

> Quick answer · Last updated 6 April 2026

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## In short

Save up to £4,000 a year between ages 18 and 50 and the government adds a 25% bonus. Use it for a first home up to £450,000, or from age 60.

A Lifetime ISA lets people aged 18 to 39 save up to £4,000 a year, with the government adding a 25% bonus (up to £1,000 a year). You can continue paying in until your 50th birthday.

The money can be withdrawn tax-free for two purposes only: buying a first home worth up to £450,000, or after age 60 for any reason. Withdrawing for any other reason incurs a 25% penalty, which removes the bonus and some of your own money.

Cash Lifetime ISAs work like a savings account. Stocks & Shares Lifetime ISAs let you invest in funds and shares — usually a better fit for time horizons of five years or longer.

## Related

- [Savings & ISAs guide](https://moneyguide.org.uk/savings/)

## Primary source

gov.uk/lifetime-isa

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.