Lifetime ISA Calculator UK 2025/26

Lifetime ISA Key Facts 2025/26

Eligibility

• Must be aged 18-39 to open a LISA
• Can contribute until age 50
• Must be UK resident for tax purposes
• £4,000 limit counts towards £20,000 total ISA allowance

How to Use This LISA Calculator

Our Lifetime ISA calculator helps you project your savings growth, plan for a first home purchase, compare LISA versus pension options, and understand the 25% government bonus. Here is how to get the most from each tab.

Step 1: Bonus Calculator Tab

Enter your monthly contribution (up to £333.33 per month, which gives the maximum £4,000 annual contribution), your current age, any existing LISA balance, and your expected investment growth rate. The calculator projects your total savings at age 50 (when contributions must stop) and at age 60 (when you can withdraw tax-free). It includes a visual chart showing contributions, government bonus, and investment growth over time.

Step 2: First Home Tab

If you are saving for your first property, enter the target home price (up to £450,000 for LISA eligibility), the deposit percentage you need, your monthly LISA saving, and any current savings. The calculator shows how long it will take to save your deposit, factoring in the 25% government bonus on your LISA contributions. It also warns you if the property price exceeds the £450,000 LISA limit.

Step 3: Retirement Tab

For long-term retirement planning, enter your current age, monthly contribution, existing balance, and expected growth rate. The calculator projects your total fund value at age 60, broken down into your personal contributions, government bonus, and investment growth. Remember, withdrawals after age 60 are completely tax-free.

Step 4: LISA vs Pension Comparison

Use the comparison tab to see how a LISA stacks up against a workplace pension for your tax rate. Enter your monthly contribution amount and select your tax band. The calculator shows the effective value of the same contribution in each vehicle, highlighting which option provides more benefit for your circumstances.

Understanding the Lifetime ISA in Detail

The Lifetime ISA (LISA) was introduced by the UK government in April 2017 as a savings vehicle to help people aged 18 to 39 save for their first home or for retirement. Here are the key rules and figures you need to know for the 2025/26 tax year.

The 25% Government Bonus

For every pound you contribute to your LISA, the government adds 25p as a bonus. If you contribute the maximum £4,000 in a tax year, you receive a £1,000 bonus. The bonus is paid monthly into your LISA account, typically within 6 to 9 weeks of your contribution. Over the full saving period (from age 18 to 50), you could contribute up to £128,000 and receive up to £32,000 in bonuses, totalling £160,000 before any investment growth.

The £4,000 Annual Limit and ISA Allowance

Your LISA contributions count towards your overall £20,000 annual ISA allowance for 2025/26. So if you put £4,000 into your LISA, you can put up to £16,000 into other ISAs (Cash ISA, Stocks and Shares ISA, Innovative Finance ISA) in the same tax year. You can hold a LISA alongside these other ISA types simultaneously.

Using Your LISA for a First Home

You can use your LISA savings (including the bonus) as part of your deposit when buying your first home, provided the property costs no more than £450,000. You must have held the LISA for at least 12 months before completion, you must be buying with a mortgage (not cash), and you must intend to live in the property yourself. The funds are paid directly to your solicitor or conveyancer on completion day.

The 25% Early Withdrawal Charge

If you withdraw money from your LISA for any purpose other than buying a qualifying first home or after reaching age 60, you will face a 25% government withdrawal charge. Crucially, because this charge is applied to the total withdrawal (including the bonus), you actually lose some of your own money. For example, if you contributed £4,000 and received a £1,000 bonus (total £5,000), a 25% withdrawal charge of £1,250 would leave you with only £3,750, which is £250 less than you put in. The only exception was a temporary reduction to 20% during the COVID-19 pandemic, which has since ended.

Cash LISA vs Stocks and Shares LISA

You can choose between a Cash LISA (which earns interest like a savings account) and a Stocks and Shares LISA (which invests your money in funds). Cash LISAs offer security of capital and are generally better for short-term saving (such as a first home purchase within a few years). Stocks and Shares LISAs offer the potential for higher long-term returns but carry investment risk, making them more suitable for retirement saving over decades.

Worked Examples: LISA Savings Scenarios

Example 1: First-Time Buyer Saving for a Deposit

Amy is 25 and wants to buy her first home worth £300,000. She needs a 10% deposit of £30,000. She already has £5,000 in savings and opens a LISA, contributing £300 per month.

• Monthly LISA contribution: £300
• Monthly government bonus: £75 (25%)
• Effective monthly saving: £375
• Amount still needed: £30,000 - £5,000 = £25,000
• Time to save: approximately 67 months (5 years 7 months)
• Total bonus received over this period: approximately £5,025
• Amy must ensure her LISA has been open for at least 12 months before completing her purchase

Example 2: Retirement Saver Starting at Age 30

Ben is 30 and decides to max out his LISA for retirement. He contributes £333.33 per month (£4,000/year) into a Stocks and Shares LISA with an expected growth rate of 5% per year.

• Annual contribution: £4,000 + £1,000 bonus = £5,000 per year
• Contributing for 20 years (age 30 to 50)
• Total personal contributions: £80,000
• Total government bonus: £20,000
• Projected value at age 50 (with 5% growth): approximately £173,600
• Projected value at age 60 (10 more years of growth, no contributions): approximately £282,800
• Entire amount withdrawn tax-free after age 60

Example 3: LISA vs Pension for a Higher Rate Taxpayer

Claire earns £60,000 and is deciding between contributing £200/month to her LISA or her personal pension.

• LISA route: £200 contribution + £50 bonus = £250 in LISA. Tax-free withdrawal at 60.
• Pension route: £200 net contribution is grossed up to £250 by basic rate relief. Claire can claim an additional £50 higher rate relief via Self Assessment (total relief: £100). But pension withdrawals after 55 are taxed as income (only 25% is tax-free lump sum).
• Verdict: For higher rate taxpayers, pensions generally offer better upfront tax relief. However, if Claire expects to be a basic rate taxpayer in retirement, the LISA's tax-free withdrawal could offset this advantage.

Frequently Asked Questions

Related Calculators