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What is a Lifetime ISA?

A Lifetime ISA (LISA) is a cash ISA designed to help you save for your first home or your retirement.

If you’re a UK resident, aged 18 to 39, you can open a LISA and earn a 25% government bonus on your savings up to £1,000 every tax year.

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How does a Lifetime ISA work?

A Lifetime ISA is a type of Individual Savings Account (ISA) which means you won’t pay any tax on the interest you earn.

You can use a LISA to save for your first home or for your retirement, but if you want to use your LISA savings for anything else you will have to pay a government withdrawal charge. But it comes with an added benefit too.

Not only do you not pay any tax on the interest you earn, you also earn a 25% government bonus on everything you deposit between the ages of 18 to 50.

That means you can earn interest on the savings you deposit, as well as the 25% government bonus. All whilst paying no tax on it, so keeping more of your earnings for the big things in life.

To apply for a LISA you need to be a UK resident aged 18 to 39. However, you can continue to top up your savings every tax year until the age of 50 and still receive the government bonus.

So, if you max out your LISA each year between the ages of 18 and 50, you could earn up to £32,000 from the government bonus alone.

Am I eligible for a Lifetime ISA?

Quickly check if you’re eligible for a Lifetime ISA by answering a few questions

First of all, are you aged between 18 and 39 and a UK resident?

Sorry, you can only open a new LISA as a UK resident and between the ages of 18 - 39. However, if you already have a LISA, you can always transfer it to Paragon

Transfer LISA

Over 39 and don’t have a LISA?

View all savings accounts

Great! Next, how are you planning to use your Lifetime ISA?

A Lifetime ISA can only be used towards your first home or retirement. You can still reach your savings goals with our other accounts

View all savings accounts

Have you ever owned a property in the UK or abroad?

Sorry you can't use a Lifetime ISA towards your first home. But, you can save in a LISA towards your retirement.​

Learn more about using your LISA towards your retirement.

Is your first home going to cost less than £450,000?

Great, you can open a LISA today

Learn more about using your LISA towards your new home.

Sorry you can't use a Lifetime ISA towards your first home costing more than £450,000 You can still save in a LISA towards your retirement

Learn more about using your LISA towards your retirement.

What can you use your Lifetime ISA for?

The Lifetime ISA is designed to help you get on the property ladder or to help you save for a comfortable retirement.

It can only be used for one of those life events if you want to receive the government bonus.

Discover the rules that apply to you, and the steps you need to take to get started, with our individual guides for using a Lifetime ISA.

Young couple outside first house

Using your LISA to buy your first home

We've put together the things you need to know, if you're using your LISA toward buying your first home.

Old couple enjoying retirement

Using your LISA for your retirement

Using your LISA towards retirement? Here's what you need to know.

Savings Champion 2021
By continuing to provide a full range of consistently competitive deposit accounts and options via a straightforward and easy-to-use online system, the Paragon Bank is the deserved winner

Lee Tillcock - Editor I Moneyfacts​

How do you withdraw money from your Lifetime ISA?

In the first 12 months any withdrawals you make from your Lifetime ISA are subject to a 25% government charge.

After that you’re free to use your LISA savings towards your first home or your retirement without any penalties. If you withdraw from your LISA for any reason other than to buy your first home or for your retirement once you’ve reached 60, the amount you take out will be subject to the 25% government withdrawal charge. This means you could end up with less money than you originally put in.

Here’s how it works…

If you save £800 this will be topped up by the 25% government bonus

This will give you a savings pot of £1,000 plus interest

If you want to withdraw the whole £1,000, the government will charge you 25% of the balance you withdraw

That will leave you with £750 which is £50 less than you originally deposited

This example does not include any interest earned.

Your LISA is also subject to a penalty if you transfer into a different type of ISA or any other account.

A Lifetime ISA is not a flexible ISA, so any savings you withdraw can’t be replaced in the same tax year without using your remaining annual LISA allowance.

What else do you need to know?

You can have more than one LISA at a time, but can only pay into one in a tax year

You can transfer an existing LISA between providers. Make sure to arrange the transfer between your providers to avoid the government withdrawal charge

If you’re using a LISA to buy your fist home, you must be a first time buyer

You can’t have owned, or had a share in, a property in the UK or abroad

You can’t have inherited a property, or be the beneficiary of a trust that includes a property

For more detailed information about our Lifetime ISA, read our Guide to Lifetime ISAs

Ready to apply for a Lifetime ISA?

Whether you’re applying for a new Lifetime ISA or you’re looking to transfer an existing one, follow the next steps to start your application and start saving for your future.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551