Lifetime ISA in 2026: the state adds 25% towards a first home or retirement

A Lifetime ISA (LISA) is a savings or investment account for two specific goals: buying a first home or saving for retirement. Its main attraction is the government bonus. According to GOV.UK, the state adds a 25% bonus to your savings, up to £1,000 a year.

How much can you pay in?

According to GOV.UK, you can pay up to £4,000 a year into a Lifetime ISA. It is from this maximum that the top £1,000 bonus builds up. LISA payments count towards your overall annual ISA limit, which for the 2026 to 2027 tax year is £20,000.

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What are the age limits?

You can open a Lifetime ISA at a certain young age, and according to GOV.UK you must make your first payment before you turn 40. You can keep paying in and earning the bonus until you are 50. After that the bonus stops, but your savings and any interest remain yours.

What can you spend it on without penalty?

You can use the money and bonus with no penalty to buy your first home, or withdraw it once you reach the scheme’s set retirement age. If you take money out for another reason, a withdrawal charge applies and part of the bonus is lost — so a LISA is not suitable as a rainy-day account.

Who benefits from a Lifetime ISA?

The scheme is especially valuable for people saving for a first flat or house: the 25% bonus effectively speeds up building a deposit. For long-term retirement saving a LISA can also help, but compare it with a workplace pension, which has its own tax advantages.

What should you keep in mind?

Lifetime ISAs come in two types — cash and stocks and shares. The investment version is potentially more rewarding, but the value can fall as well as rise. The choice depends on how soon you will need the money.

A Lifetime ISA is one of the most generous ways to save for a first home in Britain: few schemes see the state add a quarter on top. The key is to open it in time and not withdraw the money for other purposes.