Compare the best lifetime ISAs UK 2021

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

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Matthew Boyle
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Table: sorted by interest rate, promoted deals first

Data updated daily
Data updated daily
Name Product Account type Withdrawals Min. opening balance Interest rate Apply link
Moneybox – Moneybox Cash Lifetime ISA
Moneybox
Lifetime ISA
1 days notice needed
£1
0.25% AER variable
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View details
Beehive Money – Beehive Money Lifetime ISA Issue 4
Beehive Money
Lifetime ISA
1 days notice needed
£10
0.5% AER variable

View details
Paragon Bank – Cash Lifetime ISA (Issue 3)
Paragon Bank
Lifetime ISA
1 days notice needed
£1
0.5% AER variable

View details
Newcastle BS – Newcastle Cash Lifetime ISA (Issue 3)
Newcastle Building Society
Lifetime ISA
1 days notice needed
£1
0.35% AER variable

View details
Skipton BS – Online Cash Lifetime ISA Issue 4
Skipton BS
Lifetime ISA
1 days notice needed
£1
0.1% AER variable

View details
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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. Read on to find out more.

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.

However, on top of the interest paid, you’ll also earn a 25% bonus from the government on the first £4,000 you deposit per tax year. This bonus is available every year until you turn 50.

The catch is: the money can only be withdrawn after at least 12 months to help pay for your first property (worth up to £450,000) or after you turn 60 years old. If you decide to withdraw it in any other circumstances, you’ll face a 25% penalty (reduced to 20% until 5 April, in response to the COVID-19 pandemic).

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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