Compare the best lifetime ISAs UK 2022

Discover how a lifetime ISA works, how to find the best lifetime ISA and more.

Lifetime ISAs allow you to collect free money from the government to spend either on buying your first home or funding your retirement. But they're only available for these specific purposes and there are certain age stipulations.

Compare lifetime ISAs

Table: sorted by interest rate, promoted deals first

1 - 6 of 6
Name Product Account type Withdrawals Min. opening balance Interest rate Table offer Apply link
Moneybox
Lifetime ISA
1 days notice needed
£1
1% AER variable
Go to site
View details
Beehive Money – Beehive Money Retirement Lifetime ISA
Beehive Money
Lifetime ISA
1 days notice needed
£1
1.3% AER variable

View details
Beehive Money – Beehive Money Homebuyer Lifetime ISA
Beehive Money
Lifetime ISA
1 days notice needed
£1
1.3% AER variable

View details
Newcastle Building Society
Lifetime ISA
1 days notice needed
£1
1.2% AER variable

View details
Paragon Bank
Lifetime ISA
1 days notice needed
£1
1% AER variable

View details
Skipton BS
Lifetime ISA
1 days notice needed
£1
1% AER variable

View details
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How do lifetime ISAs work?

A lifetime ISA follows all the rules of traditional ISAs, meaning you’ll pay no tax on interest earned, and the amount you can deposit per tax year is capped. You can deposit a maximum of £4,000 per year in a lifetime ISA.

However, on top of the interest paid, you’ll also earn a 25% bonus from the government on the amount the amount you deposit each tax year. This bonus is available every year until you turn 50.

But there’s a catch: The money can only be withdrawn after 12 months of opening the account to help pay for your first property (worth up to £450,000) or after you turn 60 years old if you intend to use it for your retirement. If you decide to withdraw it in any other circumstances, you’ll face a 25% penalty. (This penalty was reduced temporarily to 20% between 5 March 2020 and 5 April 2021, in response to the COVID-19 pandemic).

The 25% withdrawal penalty means that, if you wanted to withdraw all the money saved in a lifetime ISA, you would end up with less money than you deposited. For example, if you deposited £800 in a tax year (and received the £200 government bonus) you would only receive back £750 after the government takes 25% of the £1,000 total.

Lifetime ISAs are available as cash ISAs or stocks and shares ISAs. You must be aged between 18 and 39 to open one.

How to find the best lifetime ISA?

The most important factor to consider when searching for a lifetime ISA is the interest rate paid. You can find the best interest rates by searching for lifetime ISAs on any price comparison website.

Customer service ratings might be of interest to you, but for most savers, this pales in comparison compared to the interest rates on offer.

Pros and cons of a lifetime ISA

Pros

  • Earn tax-free interest on your savings
  • A huge government bonus available every year until you turn 50
  • Available as a cash ISA or a stocks and shares ISA

Cons

  • You can only withdraw your funds in very specific circumstances or you’ll face a 25% penalty
  • Only available to those aged between 18 and 39

Bottom line

The government bonus on offer with lifetime ISAs is very generous, but you should be extremely sure you want to open one before you do. Withdrawals can only be made to buy your first home or fund your retirement, unless you’re willing to face a 25% fine.

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

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