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11th
Jan 2021
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Lifetime ISA vs Help to Buy ISA

Lifetime ISA vs Help to Buy ISA

We look at the differences between lifetime s and Help to buy s in 2021.

The Help To Buy ISA and the Lifetime ISA can both be used to save towards the costs of purchasing a new home.

What do these products offer, and how do they differ?


Help To Buy ISA

Lifetime ISA
Who can open one?

It is no longer possible to open a new Help To Buy ISA.


UK residents aged between 18 and 39.
Who can make contributions?

Any existing account holder – the contributions deadline is November 2029.


UK residents up until their 50th birthday.
Who are they intended for?

Only for prospective first-time buyers. For prospective first-time buyers and/or younger people wishing to save towards retirement.   


How much can I contribute?

Up to £1,200 per month in the first month and up to £200 per month thereafter.   



Up to £4,000 per tax year, as a lump sum and/or regular contributions.
How does the Government bonus work? Once you have contributed £1,600, the Government will boost your savings by 25%. The maximum Government bonus is £3,000, which is available if you contribute £12,000 or more. The bonus is only applied to the account when you instruct your solicitor or conveyancer.   


The Government automatically adds 25% to the amount you contribute, so this means an additional £1,000 if you contribute the full £4,000.
What conditions apply to the property being purchased? The property for which you use the Help To Buy ISA funds must meet these criteria:
  • UK location
  • A purchase price of no more than £250,000 (£450,000 in London)
  • The only home you own
  • Your main residence
  • Purchased using a mortgage
If you use the Lifetime ISA funds towards a property purchase, that property must meet these criteria:
  • UK location
  • A purchase price of no more than £450,000
  • Purchased at least 12 months after the Lifetime ISA was opened
  • Your main residence
  • Purchased using a mortgage
Where can I invest?

In cash deposits only.  

In cash, stocks and shares, or a combination of the two.   


I’m saving for a property with my partner – can we have a joint ISA?

No.
They must be held in single names.


No.
They must be held in single names.


How does it affect my remaining ISA allowance?

Your Help To Buy ISA is a cash ISA, so you can’t contribute to another cash ISA in the same tax year. You can still contribute to other ISAs.   


You can invest your remaining allowance in any other form of ISA.


Can I withdraw funds? Yes, you can withdraw at any time. Not unless you want to incur a significant penalty. The withdrawal penalty is 20% at present, which effectively means you lose the Government bonus. This penalty rises to 25% on 6 April 2021. You should only withdraw your funds when you are purchasing a home, or when you reach age 60.   


If you already have a Help To Buy ISA, it is possible to contribute both to that account and to a Lifetime ISA in the same tax year. However, you can only use the Government bonus from one of these products.

You can transfer your Help To Buy ISA to a Lifetime ISA. You might do this if you want the potential of better returns than those offered by cash deposits, or if you now want the flexibility to use your savings for retirement purposes. 

Lifetime ISAs

Lifetime ISA

from AJ Bell

ISA Option
Allows ISA Transfers
Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Over 2,000 Funds, Shares and ETF's
  • Invest From: £25 per month
  • Trade From (frequent trader rate): £4.95
  • Trade From (standard trader rate): £9.95

Why we like it: Start from £25 per month and save up to £4,000 per year. Wide choice of stock market linked investments, or utilise online investment ideas. Can be retained in cash. Simple annual management fee of 0.25%. Deal from £1.50 and never pay more than £9.95 per online deal. AJ Bell are regulated by the Financial Conduct Authority and are covered by the Financial Services Compensation Scheme. Capital at risk. AJ Bell Youinvest doesn’t offer advice.

  • Select your own investments, access fund options, or choose investment ideas where specialists do the hard work for you
  • Access your account online 24/7 and deal on the go with the mobile app
  • UK-based customer services team, webchat and email support
  • 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 pay in 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 from aged 60
  • 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 to open
  • If you need to access your money for any other reason, you’ll pay a 20% penalty (25% from 6 April 2021)
  • Annual account charge of 0.25%
  • Dealing and other charges will depend on the investments you choose and will apply in addition to an 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 ISA allowance
  • Tax and Lifetime ISA rules apply
  • If you choose to save in a LISA instead of enrolling in, or contributing to, your workplace pension you will miss out on the benefit of your employer’s contributions to that scheme and your current and future entitlement to means tested benefits may be affected

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

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