Lifetime ISA Calculator

The Lifetime ISA allows contributions of up to £4,000 per tax year, on which the government pays a 25% bonus of up to £1,000 per year. The bonus is paid monthly within 4-6 weeks of each contribution. You must be aged 18-39 to open a LISA, and can contribute until age 50. The LISA can be used to buy a first home worth up to £450,000 or withdrawn penalty-free after age 60.

For property purchase, the calculator compounds contributions plus bonus over the saving period. Contributing £4,000/year for 5 years gives £20,000 in contributions plus £5,000 in government bonuses, totalling £25,000 before growth. With investment returns on a Stocks and Shares LISA, the total could reach £28,000-£30,000. The full amount including all bonuses and growth can be used toward the deposit on a first home.

Early withdrawal for purposes other than first home purchase or retirement incurs a 25% government withdrawal charge on the total amount, not just the bonus. This effectively creates a 6.25% loss on your own contributions: depositing £1,000 receives a £250 bonus (total £1,250), but the 25% withdrawal charge takes £312.50, leaving you with only £937.50 — less than you put in. The calculator shows the penalty impact clearly to help with decision-making.

Why the LISA bonus is so powerful for first-time buyers. £4,000 contribution + £1,000 government bonus = £5,000 in the ISA. Over 10 years saving the max, you contribute £40,000 and receive £10,000 in bonuses — £50,000 total before any investment growth. Saved in a Stocks & Shares LISA averaging 7% growth: ~£68,000 at year 10. For a first home with 5% deposit on a £450,000 property (£22,500 deposit), you'd easily fund the deposit AND have £45k+ left for fees and furnishings.

LISA vs Help-to-Buy ISA — which is better? Help-to-Buy ISA closed to new accounts in November 2019 (existing accounts can continue contributing until November 2029). Help-to-Buy gives 25% bonus on up to £12,000 (£3,000 max) and only on properties up to £250k (or £450k London). LISA allows up to £450k property anywhere in the UK and unlimited yearly bonuses (£1k/year vs £3k lifetime). Already have a H2B ISA? Can transfer to LISA — keeps both bonuses if first home is within both schemes' rules.

The 25% LISA penalty trap. Withdraw for non-qualifying reasons (not first home, not retirement at 60+): 25% penalty on the withdrawal. This recovers the bonus AND penalises your own contribution. Example: contribute £4,000, get £1,000 bonus, total £5,000. Withdraw £5,000: receive only £3,750 (£5,000 - 25% = £3,750), losing £250 of your own money. Only escape: terminal illness diagnosis (no penalty), or wait until age 60.

Common LISA mistakes to avoid. (1) Buying a home above £450k — the cap is enforced strictly; even £450,001 means full 25% penalty. Some buyers complete on under £450k properties and immediately renovate to higher value. (2) Using LISA for a second home — only first-time buyer purchases qualify. (3) Holding LISA in cash if buying 10+ years away — invest for inflation protection. (4) Forgetting that 12 months must pass between opening and withdrawing for property — start LISA early even with small deposits.