UK Lifetime ISA (LISA) Calculator
The Lifetime ISA gives UK residents aged 18 to 39 a 25% government bonus on contributions up to 4,000 GBP per year, used for a first home or retirement at 60.
About this calculator
The Lifetime ISA (LISA) is a UK tax-wrapped account that pays a 25 percent government bonus on contributions up to 4,000 pounds per year. This calculator projects the future value of LISA contributions through compound growth, useful for both first-home savers and 60+ retirement planning.
Spring Budget 2024 and Autumn Statement 2025 context: the 450,000 pound house-price cap has remained frozen since LISA launch on 6 April 2017 despite UK house-price inflation of roughly 42 percent over the same period (ONS HPI, December 2025 release). The Treasury Select Committee's 2024 LISA review recommended raising the cap to either 500,000 or 600,000 pounds and indexing it to CPI; the Chancellor declined to act in both Spring Budget 2025 and Autumn Statement 2025. As a result, the cap excludes most of London, the South East, and increasingly the East of England, where average first-time buyer prices stand at 502,000, 367,500, and 282,000 pounds respectively (Halifax First-Time Buyer Review 2025). The 25 percent early-withdrawal penalty also remains at its standard rate; a one-year reduction to 20 percent during 2020 to 2021 (Covid-era) has not been extended despite high inflation eating into real LISA values.
How it works
Effective annual savings = Annual contribution x 1.25 FV ordinary annuity = Effective savings x [((1 + r)^n - 1) / r] Bonus cap = 1,000 pounds per year (on max 4,000 contribution) Eligibility = UK resident aged 18 to 39 to open; contributions allowed to 50
- r = real annual return; 5 percent is a reasonable stock-heavy assumption.
- n = years contributing (max 32 if opened at 18 and topped up to 50).
- 1.25 multiplier = HMRC adds 25 percent to every contribution monthly.
Worked example (2026/27)
A UK saver aged 25 maxes the LISA at 4,000 pounds per year for 13 years until age 38, then withdraws for a first home priced at 350,000 pounds. Real return 5 percent.
- Annual contribution = 4,000 pounds.
- Government bonus = 4,000 x 0.25 = 1,000 pounds per year (capped).
- Effective annual savings = 5,000 pounds.
- FV at 5 percent for 13 years = 5,000 x [((1.05)^13 - 1) / 0.05] = 5,000 x 17.713 = 88,564 pounds.
- Total contributed = 52,000; total bonus = 13,000; investment growth = ~23,564.
Alternative scenario: London buyer hits the 450,000 cap
Same saver, but in 2032 they look at a 478,000 pound flat in Zone 3 London (the average Q1 2032 forecast from Knight Frank). The LISA cannot be used because the property exceeds the cap.
- Options at this point: pay 25 percent penalty to access funds, keep contributing for retirement (age 60), or buy a sub-450,000 property elsewhere.
- If they early-withdraw 88,500 pounds: penalty = 22,125. Net = 66,375 pounds.
- The 22,125 pound loss exceeds the original bonus (13,000) by 9,125 pounds, the famous 6.25 percent net-of-bonus penalty on contributions.
- If they wait until 60 (22 more years at 5 percent real growth): 88,500 x (1.05)^22 = 259,154 pounds, withdrawn fully tax-free, no penalty.
Reference: LISA rules 2026/27
| Rule | Limit |
|---|---|
| Annual contribution cap | 4,000 pounds (within 20,000 ISA total) |
| Government bonus | 25 percent, capped 1,000 pounds/year |
| Open between ages | 18 to 39 |
| Contribute until | day before 50th birthday |
| Home purchase price cap | 450,000 pounds (UK first home) |
| Minimum account age before withdrawal | 12 months |
| Penalty for early withdrawal | 25 percent on withdrawal amount |
| Tax-free retirement access | age 60 and over |
| Account types | Cash LISA (Skipton, Moneybox) or Stocks & Shares LISA (AJ Bell, Hargreaves Lansdown, Dodl) |
| Bonus payment timing | Monthly, between 4 to 9 weeks after contribution |
| Counts toward Help to Buy / LBTT first-time buyer relief | No clash; LISA stacks with Help to Buy mortgage and Scottish LBTT first-time buyer relief up to 175k |
Common mistakes
- Buying above the 450,000 cap. The cap is the purchase price, not the loan; one pound over and you lose the entire bonus to the 25 percent penalty.
- Withdrawing within 12 months of opening. Any withdrawal in the first year, including for a qualifying home, triggers the 25 percent penalty.
- Missing the age window. You must open the LISA before turning 40. After that, no new LISAs but existing ones can keep receiving contributions until 50.
- Doubling up on the 20,000 ISA cap. The 4,000 LISA limit eats into the 20,000 overall annual ISA allowance.
- Treating bonus as guaranteed for retirement. The bonus is yours only at age 60 or qualifying first-home purchase; any other withdrawal claws it back plus 6.25 percent.
- Choosing a cash LISA when you have a 20+ year horizon. Cash LISAs underperform stocks-and-shares LISAs over the long run after inflation.
- Stacking with a Help to Buy ISA wrong. You can hold both, but you can only use the bonus from ONE for the same home purchase. Pick whichever gives more bonus by completion date (LISA usually wins for purchases over 250k).
- Forgetting the conveyancing solicitor step. The LISA bonus is paid directly to your solicitor, not to you. Use a solicitor familiar with LISAs because some firms still bill incorrectly or miss the 45-day claim window.
Related tools and glossary
Frequently asked questions
What is the LISA contribution limit in 2026/27?
4,000 pounds per tax year, available to UK residents aged 18 to 50. The 4,000 counts against your overall 20,000 annual ISA subscription. The government pays a 25 percent bonus on contributions, capped at 1,000 pounds per year, paid monthly. The bonus is not subject to income tax.
Can I use a LISA for any home purchase?
Only a first home in the UK with a purchase price of 450,000 pounds or less. The LISA must have been open at least 12 months before withdrawal. The 450,000 cap has not risen since LISA launch in April 2017 despite UK house-price inflation, so the cap excludes most of London and the South East.
What is the LISA withdrawal penalty?
25 percent of the withdrawal amount applies for any non-qualifying withdrawal before age 60. Because the 25 percent penalty is taken on the post-bonus balance, you end up losing roughly 6.25 percent of your original contribution on top of clawing back the bonus. A 1,000 pound contribution + 250 pound bonus = 1,250; 25 percent penalty = 312.50; net 937.50.
LISA vs SIPP: which is better for retirement?
For basic-rate UK taxpayers, the LISA bonus (25 percent on contributions) matches the SIPP basic-rate tax relief. The LISA wins on the tax-free withdrawal at 60 vs the SIPP's 25 percent tax-free plus marginal-rate income tax on the rest. For higher and additional-rate payers, the SIPP wins because they can claim back the extra 20 to 25 percent via Self Assessment.
How does the LISA interact with the 2026/27 SDLT rates?
From 1 April 2025 the SDLT first-time buyer relief reverted to the pre-2022 threshold of 300,000 pounds (full relief) tapering off at 500,000 pounds. A LISA-funded first-home purchase at the 450,000 cap means SDLT of (425,000 - 300,000) x 5 percent = 6,250 pounds. The LISA bonus more than offsets this for a saver who held the LISA five-plus years. Scotland uses LBTT with a 175k first-time buyer threshold; Wales uses LTT with no first-time buyer band.
Sources
- HMRC, Lifetime ISA: Guidance for ISA managers, 2026/27 contribution and bonus rules.
- GOV.UK, Lifetime ISA (LISA), 4,000 pound limit and 450,000 pound house-price cap.
- HMRC Annual ISA Statistics 2024 release: LISA take-up and average balances.
- Treasury Select Committee, Lifetime ISA: Review, 2024 (cap inflation analysis).