Aged 18-39? Not an Idiot? Open a Lifetime ISA Now for Just £1 Before It's Too Late
Published / Last Updated on 29/01/2026
What is a Lifetime ISA?
- The Lifetime ISA (LISA) was introduced by the Conservative government in 2017.
- You can open an LISA between ages 18 and 39 and are allowed to continue to save up to £4,000 pa until age 50.
- This was to encourage anyone between the ages of 18 and 50 (provided LISA opened by age 39) to save either for retirement or for a house deposit by offering an incentive of a 25% bonus from the government for every £1 that you saved.
- LISAs are an additional ISA allowance on top of the normal £20,000 pa ISA allowances.
- LISAs grow income tax and capital gains tax free, just like a normal ISA.
- You can save up to £4,000 pa in a LISA.
- After 6-9 weeks, following your contribution, a government bonus of 25% is added.
- Meaning that you could save up to £4,000pa (£333.33pm) and get a £1,000 bonus, meaning up to £5,000 each year saved.
- Towards a house deposit or
- Towards your retirement and can access all funds, tax free at age 60, whereas normal pension funds offer 25% tax free cash and the balance 75% is potentially taxable.
- Penalties: If you cash in a LISA early and do not use it for house deposit or later for retirement from age 60, you lose all the 25% government bonuses.
HMRC Tax Free Savings Newsletters 19 and 20
- Newsletter 19 confirmed (as detailed in the Budget)
- The government would be withdrawing the Lifetime ISA and replacing it with a new savings plan.
- The new savings plan would only be for deposits for house purchase by first time buyers.
- This means that savings for retirement would no longer be possible.
- Newsletter 20, published on 28/01/2026, confirmed that if you have an existing LISA in place, before it officially ends (likely 2026/27):
- You will be allowed to continue under the old LISA rules indefinitely. This means if you are aged between 18-39:
- You can start a LISA today even just for £1 (under old rules), and make contributions anytime before you reach age 50, and get a 25% bonus.
- You can also still use it for retirement or house deposit.
- You avoid any new restrictions imposed by the LISA replacement due in either 2027 or 2028.
We repeat: Aged 18-39? Not an Idiot? Open a Lifetime ISA Now for Just £1 Before It's Too Late.
