We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Important information: Information on this page isn’t personal advice. If you’re unsure which investments are right for you, you should seek financial advice. If you save into a Lifetime ISA (LISA) instead of a pension, you could miss out on employer contributions, and your entitlement to certain means-tested state benefits could be affected. Investments can go down as well as up in value, so you could get back less than you put in.

You can withdraw money free of charge from a Lifetime ISA to buy your first eligible home, or from age 60. Other withdrawals will usually mean a 25% government charge, so you could get back less than you put in. Tax rules can change and their benefits depend on your circumstances.

Saving for retirement with a Lifetime ISA

Many people think a Lifetime ISA (LISA) is a way to save and invest for your first home, and it is, but it can also be considered along with a pension as a tax-efficient way to invest for retirement.

You can open an account if you’re between 18 and 39 years old. You have the freedom to choose your own investments, and your money can grow free from UK capital gains and income tax.

How much can you pay into a LISA?

You can pay in up to £4,000 each tax year, and the government will add a 25% bonus (up to £1,000 every tax year). You need to be aged between 18 and 39 to open a LISA but, once open, you can make contributions and get this bonus until age 50.

The Lifetime ISA allowance of £4,000 forms part of the £20,000 ISA allowance for this tax year. Remember, tax rules can change and their benefits depend on your circumstances.

LISA calculator

Try our Lifetime ISA calculator to find out how much your government bonus could be worth.

Try the calculator

When can I take money out for retirement?

You decide how much to invest and when to access it but you’ll normally pay a 25% penalty on any money you take out before age 60 (if it’s not put towards buying your first home), so you could get back less than you put in.

You might decide to take money out regardless of the penalty but remember, by making early withdrawals you run the risk of falling short in later life.

Withdrawals after age 60 can be taken completely penalty and tax free.

Lifetime ISA or Pension - which is best?

If you have a workplace pension, that should be your first port of call for retirement savings because your employer will contribute to your pension too.

Once your employer is making pension contributions at the maximum level, or you don’t have a workplace pension, it may be more tax-efficient to make contributions into a LISA. The option you choose will depend on your personal circumstances.

Download LISA vs pension factsheet

Tax treatment of contributions and withdrawals

If you earn £50,270 or less, then a LISA is likely to be more tax-efficient than personal pension contributions if your employer doesn’t offer salary sacrifice. This is because the bonus you get from the government is effectively the same amount you’d receive as basic-rate tax relief in a pension. The difference is you can take money out of a LISA tax free from age 60. Whereas with a pension, only up to 25% is normally tax free but you can make withdrawals from age 55 (57 from 2028).

If you earn more than £50,270 a pension is likely to be more tax-efficient. Despite pension income being taxable when you withdraw it, you can claim up to an additional 25% in pension tax relief on your pension contributions. Different tax rates and bands apply for Scottish taxpayers.

What are the benefits of a Lifetime ISA with HL?

  • Award winning
    HL have won over 200 awards including Best Buy Lifetime ISA 2024 from the Boring Money Awards.

  • Wide investment choice and expert research
    Choose from over two thousand investments. You can get expert research to help you decide where to invest including our latest fund ideas, build your own portfolio, or ask for personal advice if you need it.

  • Easy and simple to manage
    Check your LISA on the go, online or with the HL app.

  • Trusted by 1.8 million clients
    HL is a secure FTSE listed company, regulated by the Financial Conduct Authority.

  • Free to set up, and a maximum annual fee of 0.25%
    No charge to buy or sell funds, or to stop and start payments. Funds also have their own charges and there’s dealing fees for shares. View full charges.

Open a Lifetime ISA

You can open an HL Lifetime ISA with a £100 lump sum, or from as little as £25 a month. The quickest way to open an account is online, you’ll just need your debit card and national insurance number to hand once you have read all the important information.

Open a Lifetime ISA

Why choose the HL LISA?

HL client Joanna shares her first hand experience of saving into a Lifetime ISA (LISA), and explains how this is a powerful tool to help her to build a secure financial future. Read Joanna's full story

Frequently asked LISA questions

Best Buy Pension 2024
Best Buy LISA
Boring Money Awards 2024
Best Investment App 2024
Best Investment App
Boring Money Awards 2024
Best Online Stockbroker 22/23
Best Online Stockbroker
The Personal Finance Awards 22/23

Help and support

If you have any questions about pensions, you can speak to one of our UK-based client support experts.

Call us on 0117 980 9926

Read our FAQs

Email us