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Santander Lifetime ISA

Save for your first home and retirement at the same time

Investment ISAs put your capital at risk & you may get back less than you originally invested

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Lifetime ISA

from Hargreaves Lansdown

Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Over 2,500 Funds, Investment Trusts, Bonds, ETF's or Cash. Capital at risk.
  • Invest From: £100 single or £25 per month

Lifetime ISA

from AJ Bell

Regular Savings
  • Protection Scheme: FSCS
  • Fund Choice: Over 2,000 Funds, Shares and ETF's. Capital at risk.
  • Invest From: £25 per month

Lifetime ISA

from Nutmeg

  • Protection Scheme: FSCS
  • Fund Choice: A range of portfolios for your Lifetime ISA suited to your chosen risk level and investment style. Capital at risk.
  • Invest From: From £100 to £4,000.

Please be aware we are not currently able to offer any Lifetime ISAs from Santander.

Who are Santander?

Santander are one of the UK’s largest retail and commercial banks. They are a household brand in the UK and still operate a large number of high-street branches across the country offering a face-to-face service.

They provide many financial products and services for personal and commercial banking, including ISA accounts for individual savers.

At the current time, Santander do not offer a Lifetime ISA product.

What is a Lifetime ISA?

A Lifetime ISA (LISA) is an investment product designed by the government to incentivise people under 40 to save for a first house deposit.

HMRC adds 25% to everything you put into your Lifetime ISA.

For example, if you contribute up to the annual LISA limit of £4,000, HMRC tops this up 25% to £5,000 for free.

What are the advantages of a Lifetime ISA?

ISA stands for Individual Savings Account, and all ISAs are tax-efficient by nature.

In a LISA, or any other type of ISA, you don’t have to pay:

  1. Capital Gains Tax on the growth of your investments
  2. Income tax on the interest you earn
  3. Income tax on dividends you receive

In addition to the tax benefits, Lifetime ISAs also benefit from the following features:

  1. You can invest in either a Cash LISA with fixed or variable interest rates, or a Stocks and Shares LISA which gives you access to the entire stock market.
  2. You can save up to £4,000 per year, and get a free £1,000 each year from HMRC.
  3. You can put both your and your partner’s Lifetime ISA savings towards the same house deposit as long as it’s your first home.
  4. You can withdraw your funds free of charge at age 60 if you don’t end up using them for a house deposit.

What are the disadvantages of a Lifetime ISA?

The primary drawback of Lifetime ISAs is the charge you pay for withdrawing if it’s not for a first house deposit or at age 60.

The government charges 25% on withdrawals that don’t fit into the above criteria.

This charge is greater than the bonus you originally get from HMRC because of the way percentages work.

We demonstrate this in the example below.

How your Lifetime ISA’s unsolicited withdrawal charge outweighs the 25% government bonus

Example:

  • You contribute £4,000 to a Lifetime ISA.
  • HMRC adds 25% of £4,000, which is £1,000, bringing your total amount invested to £5,000.
  • You then withdraw your full £5,000.
  • HMRC charges 25% of your withdrawal, which is £1,250, leaving you with just £3,750 to withdraw.
  • This comes to £250 less than you originally invested, representing a -6.25% loss.

What type of house can I buy with a Lifetime ISA?

Before investing in a Lifetime ISA it’s important to review what types of house purchases qualify for LISA funds.

You don’t want to invest in a LISA and it not be eligible for your property purchase as you’ll then have to wait until age 60 before you can withdraw your money free of charge.

Lifetime ISA property rules:

  • The property must be the first home you’ve bought
  • You must live in the property – it can’t be a buy to let
  • The property must be valued at £450,000 or under
  • You must be buying with a mortgage and not purchasing the home outright with cash
  • You must have held your Lifetime ISA for at least 12 months before cashing in

Can you transfer a normal ISA into a Lifetime ISA?

You can benefit from the 25% government bonus on your existing ISAs by transferring them into a Lifetime ISA.

You just need to complete at Lifetime ISA transfer form with your LISA provider, and they will administer the transfer on your behalf.

You’ll only be able to transfer up to £4,000 of ISAs to a Lifetime ISA per tax year as your transfers count towards your annual LISA allowance.

How do I open a Lifetime ISA?

To open a Lifetime ISA account:

  • Go to your chosen Lifetime ISA provider’s website
  • Follow the instructions to create an account
  • Have your National Insurance Number to hand
  • Use your debit card to make a lump sum contribution or bank details to set up a Direct Debit

You must also be between the ages of 18-39, and be a UK resident.

You can also open a LISA account over the telephone or with a postal application form. 

Frequently Asked Questions

£4,000 for the 2021/22 tax year.

Yes, any dividends, capital gains or withdrawals will be 100% tax-free from a LISA.

No. Your Lifetime ISA allowance counts towards your total annual allowance, so if you have contributed £4,000 to a LISA then you can only contribute a further £16,000 to a standard ISA.

Yes, you can open a LISA if you already have a Cash ISA or Stocks and Shares ISA.

You will be charged more than the bonus you get if you make a withdrawal against the permitted LISA rules. This is because 25% of your withdrawal after the added government bonus will total more than 25% of your original contribution.

You can also lose money in a Stocks and Shares LISA if your investments fall in value.

No, you must be between the ages of 18 and 39 to open a Lifetime ISA.

Yes, if you do not use all of your LISA value for your first home, then you can take the remainder at age 60 without being charged.

You cannot transfer a Lifetime ISA to a standard ISA as this would be a way of avoiding the 25% charge for unsolicited withdrawals.

If you still hold your LISA when you die, it will form part of your estate and be liable to Inheritance Tax (IHT) just like any other investment.

Up to £1,000 bonus per year from the government

Aged between 18 and 39? The Lifetime ISA offers an exciting way to save for your first home and later life with a 25% boost from the government.

Download our factsheet now to find out more, including:

  1. How much you can invest each year
  2. The penalties to watch out for when you access your money
  3. Where you can invest (cash, stocks and shares)
  4. The options for savers who already hold a Help to Buy ISA

FREE Lifetime ISA Explained - Factsheet from Hargreaves Lansdown »

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.

Lifetime ISAs

Save for your first home and retirement

Compare Lifetime ISAs

Junior ISAs

Invest for your child’s future

Compare Junior ISAs: 

Stocks & Shares ISAs

Invest tax-free in stocks and shares 

Compare Stocks and Shares ISAs:

Latest News

5 Considerations for Your Next Investment ISA

15th March 2021

You've decided to invest your savings into a Stocks and Shares ISA. You'll be using your tax-free ISA allowance for this year before the deadline, while also investing your money for your future. But what do you need to consider before opening an account? We've put together a list of our top five considerations for you to think about before you click "apply". 

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