skip to main content
Nov 2020

How to Use Your Lifetime ISA Allowance

How to Use Your Lifetime ISA Allowance

Every UK resident over the age of 18 has a yearly Lifetime ISA allowance which they can pop into a LISA to gain very attractive returns and gains year-on-year. But what is the allowance, and what's the best way to make the most of yours? 

What is a LISA?

A Lifetime ISA (LISA) is a type of ISA which is designed specifically for long-term savings.

These are a tax-efficient wrapper where you can put your money to gain interest or returns, and also a 25% bonus from the government. For this (very attractive) ISA, there are strict regulations, including…

  • You can only put in £4000 per year
  • You can only pay into one LISA each year
  • You can only hold two LISAs in one lifetime
  • You can only withdraw your funds for two specific reasons (outlined below)
  • The earliest you can take money out of your ISA is one year after opening the account

This is because these are designed for long-term life long saving – as the name would suggest.

How can I use it?

You can use your LISA for two purposes:

  • To pay for a deposit for your first home
  • To fund retirement

If you take your money out for any other reason, then you will loose the 25% bonus as well as potentially being subject to extra penalty charges, depending on your account and provider.

How can I maximise my allowance?

The main way to maximise your LISA allowance is by putting as much as possible of your spare cash into the account each year as possible.

With an ISA, the amount you make is dependent on what you put in.

If the LISA limit is £4000, and you get a 25% bonus than you could stand to get a cash injection of £1000, which is a return rate which you will struggle to find elsewhere.

So, for example…

If you open a LISA at 18, and put in £4000, you’ll receive the 25% bonus. This would leave you with £5000 in the bank.

If you continue to save that rate, year on year, then by the time you reach retirement you would have saved £132,000 of your own money – and received a very healthy bonus of £33,000 in total bonuses.

This is assuming you only have one LISA and so not use it to help fund you first home, however even if you do this, you would still have a fairly healthy return and the majority of house deposits for first-time buyers sit at a 5-10% of the total value. Considering the average house is £230,000 approximately, then you’ll only have to knock off £23,000 off the total potential saving.

Also – if you are part of a couple, then you are able to put two LISAs towards a house deposit – meaning you can get double the benefit and get double the boost. This is of course assuming you are buying the property under a joint mortgage.

When can I access my Lifetime ISA allowance?

There are only a few instances when you can access your LISA funds. These are:

  • When buying your first home
  • When you reach the age of 60

There are some exceptions to this, for example if you have been diagnosed with a terminal illness then of course you will be able to access your funds when you require them. 

Read more about Lifetime ISAs here.

Lifetime ISAs

Lifetime ISA

from Hargreaves Lansdown

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Over 2,500 Funds, Investment Trusts, Bonds, ETF's or Cash
  • Invest From: £100 single or £25 per month

Why we like it: Easy set up in a matter of minutes. Start with as little as £25 and save up to £4,000 per year. Wide choice of stock market linked investments, or can be retained in cash. Fund factsheets and investment tools available. Simple annual management fee of 0.45%. There may be some other charges depending on the investment choices. Hargreaves Lansdown are regulated by the Financial Conduct Authority and are covered by the Financial Services Compensation Scheme. Capital at risk.

  • Open in five minutes
  • Open with lump sum, regular contributions or transfers from existing ISA's
  • Contribute up to £4,000 per year until you’re 50
  • Get a 25% government bonus: For every £4 you invest you receive a £1 bonus
  • Use your savings to buy your first home up to a value of £450,000, or use as retirement income
  • You can contribute to both a stocks and shares Lifetime ISA and a ‘regular’ stocks and shares ISA in the same tax year
  • Must be UK resident aged 18-39
  • If you need to access your money for any other reason, you’ll pay a 25% penalty
  • Annual account charge of 0.45%
  • Dealing and other charges will depend on the investments you choose and will apply in addition to our annual account charge
  • Tax rules can change and their benefits depend on your circumstances. Lifetime ISA allowance forms part of the overall £20,000 annual allowance
Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.

High Income ISAs

High income ISA ideas:

ISAs Products

Cash ISAs

Fixed Rate & Instant Access ISAs:

Cash ISAs: 

Stocks & Shares ISAs

Types of Stocks and Shares ISA include: 

Stocks and Shares ISAs

Latest News

Our Top Picks for Technology Stocks and Shares ISAs

19th January 2021

The tech industry has been booming for the past fifteen years; and it seems to be a rollercoaster that only goes up. The tech bubble has yet to burst, with companies coming out with more and more technological developments and consumer demand is certainly not slowing down. So, for the tech-savvy investor who wants to put their pennies behind this strong growing industry, we’ve put together our top three picks for Technology Stocks and Shares ISAs. 

Newsletter Signup

Sign up to our Newsletter to get exclusive news and offers direct to your inbox.

About us is a trading style of Fair Investment Company.

We've been comparing and recommending ISAs for many years so you can trust you're in good hands.

About us

4.74 Average

23 Reviews


I found the way the different options are presented very clear - much more useful than some other comparison sites. I sent it to my daughter as well.


Very informative, find myself a good ISA account with best return in terms of interest.


Easy to use website and up to date. Saved the link on my tablet.

Rob Holden

The website was very useful and informative.

Andrew Johnson

ISA can be confusing at first and this site includes a useful and helpful introduction into the world of ISAs


Excellent website - clear and helpful information about different products - and a trustworthy partner.


Easy to use website and up to date. Saved the link on my tablet.


Really simple to use and all the information was clear with lots of products available. The interest calculator was really handy too. Have bookmarked and will definitely use again.

Hannah Gordon

This was a really user-friendly site, and was very helpful when it came to comparing accounts and choosing my 2016 ISA.


Easy to use website and up to date. Saved the link on my tablet.


If you wish to invest in an ISA this site has it all. A super comprehensive range of simply explained products from all the major companies.

Cristina Iacob

Very knowledgeble company with an extensive range of services, a great website with loads of useful information.


Nice graphics and easy to navigate

Dr Alan Rogan BSc PhD FCIOB FCABE Eur Ing

Good advice and professional approach


Very helpful for getting my annual ISA

Jonny Doulton

Clear, concise and very professional outfit with an excellent choice of market leading deals.

Paul Tissington not only helped narrow down my choices for a Junior ISA but also provided additional practical information that helped demystify the whole process.

Sunil Karadia

Just the site I needed, I have been looking for a suitable ISA for a while, but as there are so many to choose from, find it difficult to find the right one for me.

James Weatheritt

I found the information on very helpful and easy to understand. The site is easy to navigate and find what you're looking for.

Lisa Holden

I found very insightful and easy to navigate through. The content was useful and helped me make my ISA decision.

Neta Pourhosseini

I thought the information provided was easy to understand and very informative, I would recommend to friends for deffinite.