A LISA, or Lifetime ISA, is a tax-free account for savers aged 18 to 39 that adds a 25% government bonus on contributions. The money is for a first home or for retirement from age 60, with penalties for other withdrawals.
In one line: A LISA adds a 25% government bonus on savings earmarked for a first home or retirement from age 60.
How a LISA works
The Lifetime ISA is run within the ISA framework and overseen by HMRC. Up to 4,000 GBP can be paid in each tax year, attracting a bonus of up to 1,000 GBP for 2026-27 (HMRC). That 4,000 GBP counts within the overall 20,000 GBP ISA limit.
For example, a saver paying in the full 4,000 GBP receives a 1,000 GBP bonus, giving 5,000 GBP working towards a first home worth up to 450,000 GBP or retirement.
Withdrawing for any other reason before age 60 triggers a 25% government withdrawal charge, which can return less than was paid in.
LISA vs a standard ISA
A standard ISA has no age limit, no bonus and free access at any time. A LISA adds the 25% bonus but ties the money to a first home or age 60 and penalises early access.
The LISA sits inside the same 20,000 GBP annual allowance, so paying into one reduces the room left in others.
Primary source: GOV.UK: Lifetime ISA