Lifetime ISA calculator

The calculator adds a 25% bonus to each monthly payment and grows the balance at the rate you set, one year of age at a time. Payments are capped at £4,000 a year and stop at your 50th birthday. In the worked example, £250 a month from age 25 to 30 at 5% a year is £15,000 paid in and £3,750 of bonus, and grows to £21,192.

The bonus is treated as arriving with each payment. In practice the provider claims it from HMRC each month and it lands a few weeks later, so a real balance runs slightly behind.

Figures are in pounds as they'll be, not adjusted for inflation, because the £450,000 price cap is a fixed cash amount. It hasn't changed since the Lifetime ISA launched in April 2017.

The withdrawal charge

Money taken out for anything other than a first home, terminal illness or reaching 60 carries a 25% charge on the amount withdrawn. Because the bonus was 25% of what you paid in, the charge takes back more than the bonus: pay in £100, get £25 of bonus, take out the £125 and the charge is £31.25, leaving £93.75. That's 6.25% of your own money gone, along with the growth on it.

Lifetime ISA or pension

For retirement, the calculator puts the same money from your pocket into a Lifetime ISA and a personal pension, paid in until 50 and compared at 60. The pension gets relief at your band's rate, with relief above the 20% added at source assumed to be reclaimed and paid in too, so £100 becomes £125 for a basic-rate taxpayer and £166.67 for a higher-rate one. At 60, Lifetime ISA money comes out tax-free. From the pension, 25% is tax-free and the rest is taxed at the rate you pick for retirement.

Assumptions

• Growth is a smooth yearly average after fees. Cash interest rates change, and stocks and shares can fall for years at a time.
• Ages are whole years, and a year of payments is twelve monthly payments.
• Today's Lifetime ISA, ISA and pension rules apply for the whole projection, including the £4,000 limit and 25% bonus.
• Employer pension contributions, salary sacrifice, Scottish income tax rates and pension payments after 50 aren't modelled.

A withdrawal for a first home is free of the charge when all of these apply:

• You've never owned a home, or a share of one, anywhere in the world.
• The property costs £450,000 or less. The cap is on the whole price, even if you're buying with someone else.
• The account had its first payment at least 12 months before the withdrawal. The clock runs for each Lifetime ISA separately.
• You're buying with a mortgage, through a conveyancer or solicitor, and the money goes straight to them.
• You'll live in the property as your only or main home. A buy-to-let or holiday home carries the charge.

Two first-time buyers can each use their own Lifetime ISA, bonus included, on the same purchase. If the purchase doesn't complete within 90 days, the conveyancer returns the money to the account, with extensions available while the purchase is still going ahead.

At Budget 2025 the government said it would replace the Lifetime ISA with a simpler ISA for first-time buyers. HM Treasury consulted on how it should work between June and August 2026. The proposal is an account for first-time buyers only, with no retirement use, and launch has been proposed for April 2028, a date that could still change.

The government has said the bonus, yearly limit and property price cap will be set at a future fiscal event. Until they are, nothing about the new account's figures is confirmed.

Lifetime ISAs carry on. You can still open one, and the consultation says holders will be able to keep paying in under the existing rules indefinitely, retirement saving included. Once the new account is available it will be offered in place of the Lifetime ISA. Moving money from a Lifetime ISA into the new account isn't part of the proposal.

This calculator uses the Lifetime ISA's current rules, and will be updated when the new account's details are confirmed.

Your ISA allowance

Payments into a Lifetime ISA count towards your £20,000 ISA allowance for the year; the bonus doesn't. You can pay into only one Lifetime ISA in a tax year.

Employer contributions

A workplace pension usually comes with employer contributions, which a Lifetime ISA doesn't. Paying into a Lifetime ISA instead of a workplace pension can mean giving those up.

Getting to the money

A personal pension can be reached from 55, rising to 57 from April 2028. A Lifetime ISA is charge-free from 60, but can be reached at any age if you accept the charge.

Means-tested benefits

Money in a Lifetime ISA generally counts as savings for means-tested benefits such as Universal Credit. Pension savings not yet being drawn generally don't.