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11 Jul 2024

Best lifetime Isas of 2024

Find out what a lifetime Isa is, the best rates available and how to boost your savings by as much as £32,000 for free

Faye LipsonSenior researcher & writer

A man drops a coin into a small yellow piggybank

In this article

What is a lifetime Isa?
Best cash lifetime Isa providers and rates
Best stocks and shares lifetime Isa providers and rates
How does a lifetime Isa work?
How do I open a lifetime Isa?
How much can I pay into a lifetime Isa?
Can I withdraw money from a lifetime Isa?
Can I transfer a lifetime Isa?

Retirement and buying your first home are two of the biggest money milestones a person can experience. Opening a tax-free lifetime Isa allows you to save for either or both of these life events, and get thousands of pounds of government cash as a bonus.

But lifetime Isas have some fairly strict rules attached, and the interest rate you can earn varies widely between providers. This guide explains how lifetime Isas work and the best providers based on whether you want a cash or stocks and shares Isa.

What is a lifetime Isa?

The lifetime Isa (Lisa) is a tax-free savings or investments account designed to help those aged 18-39 at the time of opening to buy their first home or save for retirement.

The main selling point of lifetime Isas is the generous 25% bonus the government pays on your savings when you come to use them, up to a maximum of £32,000 if you save for many years. We've got all the latest rates below, but if you want to know more about how lifetime Isas work first, click here to jump straight to that section.

Best cash lifetime Isa providers and rates

The table below gives an overview of all of the cash lifetime Isas currently on the market, so you can see which offers the best rate and terms for you. For more detailed information, click on the list of providers below the table.

Provider (links go to provider websites)	AER	How to open	Does it accept Isa transfers?	Other terms
Moneybox	5%	App	Yes	£1 minimum initial deposit. Rate includes a variable 4% base rate and a fixed one-year bonus rate of 1%.
Tembo (formerly Nude)	4.3%	App	Yes	£1 minimum initial deposit
Beehive Money	3.5%	App	The homebuyer lifetime Isa does; the retirement lifetime Isa doesn't.	£1 minimum initial deposit.
Newcastle Building Society	3%	Online	Yes, from other lifetime Isas.	£1 minimum initial deposit.
Paragon Bank	3.51%	Online	Yes, from other lifetime Isas.	£1 minimum initial deposit. Can be managed online, by post or telephone.
Skipton Building Society	3.25%	Online	Yes	£1 minimum initial deposit.

Last checked 10 July 2024. AER and terms subject to change.

More details:

Beehive Money, which is part of Nottingham Building Society, offers two lifetime Isas. You can choose from the homebuyer lifetime Isa and the retirement lifetime Isa.

Transfers in are not permitted with the retirement lifetime Isa.

You can open the account via the Beehive Money app, and savers must make a minimum initial deposit of £1.

Anyone who initially signed up for a lifetime Isa from Nottingham Building Society will now have had their account transferred to Beehive Money.

Formerly called Nude, this provider has now been acquired by mortgage platform Tembo, which has scrapped the £2 monthly fee Nude customers used to pay.

This account is part of the Tembo app, which can be connected to your bank, and gives tips on how to save for your first home more quickly. You can save jointly with your partner (if they're eligible).

The cash lifetime Isa requires a £1 minimum initial deposit.

If you want to withdraw money for your first home, there's the standard 30-day withdrawal period. However, if you're withdrawing money for another reason, you must give 95 days' notice.

The account accepts transfers.

Best stocks and shares lifetime Isa providers and rates

The table below gives an overview of all of the stocks and shares lifetime Isas currently on the market so you can compare and work out which might be the best option for you. As with all investments, there are risks involved, so you might get back less money than you put in.

Please note that the information in this table is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of a provider before committing to any financial products.

For more detailed information, click on the list of providers below the table.

Provider (links go to provider websites)	Accepts transfers in?	Fees	Minimum opening amount	Worth knowing
AJ Bell (a)	Yes	Vary according to which type of investment you choose. Custody charge of 0.25% on shares (max £3.50/month) and 0.25% on funds; charge per deal on buying and selling investments; buy and sell investments online from £1.50.	Minimum deposit of £500 or set up a regular payment of £25 per month	£25/month minimum direct debit.
Hargreaves Lansdown (a)	Yes	0.25% annual account charge on shares (capped at £45/year). 0.25% annual charge on funds for first £1m invested (dropping to 0.1% £1m-2m and no charge on more than £2m). May also be dealing charges for online, mobile app and telephone share dealing.	£100 lump sum or £25 direct debit	Has more than 3,000 funds to choose from, plus UK and overseas shares and investment trusts, bonds and ETFS. You can also hold cash.
MetFriendly (Met Police and family only)	Yes	0.37% one-off entry costs; 0.14% portfolio transaction costs; 1.47% management costs	£1,200-£4,000 lump sum or £100 direct debit	For all serving, retired and former Metropolitan police officers or staff, and their immediate family. 1.5% guaranteed bonus added until April 2025 for amounts invested in 2024/25 tax year.
Moneybox	Yes	£1 per month subscription fee; 0.45% platform fee; variable fund provider fees	£1	The monthly subscription fee is waived for the first three months.
Tembo (formerly Nude)	Yes	0.35% annual platform fee; 0.17% annual fund provider fee	£1	Account must be opened and managed via Tembo's mobile app. The £2 monthly fee previously charged by Nude has now been scrapped.
Nutmeg	No	Annual costs depend on which fund you choose and how much you have invested. Additional charges for investment fund costs and average market spread, which vary	£100	Account must be opened and managed online or via mobile app.
One Family	Yes	1.1% annual fee	£250 lump sum or £25 direct debit	Only direct debit or debit card payments are accepted. Educational grants available for young people aged 15-19.

Last checked 10 July 2024. (a) This link is an affiliated link which is tracked by Which? using third-party cookies. By clicking this link you are consenting to this. If you go through to it, it can sometimes result in a payment or benefit to Which?. This has absolutely no influence on the results of our research. We will always provide a link to the provider whether or not there is a commercial deal in place or not.

More details:

AJ Bell is an investment platform, with a lifetime Isa that offers investment options in shares, investment trusts, unit trusts, gilts, corporate bonds and Open-Ended Investment Companies (OEICs).

Alternatively, you can invest in AJ Bell Ready-made portfolios that are managed by a team of investment experts, who make the day-to-day decisions.

You can buy and sell investments online from £1.50. Annual custody charge is 0.25% for funds and maximum £3.50 per month for shares.

It accepts transfers from both cash and stocks and shares Isas, as well as existing lifetime Isas and Help to Buy Isas. There are no charges on holding cash.

Hargreaves Lansdown offers a stocks and shares lifetime Isa. You can open with a lump sum of £100 or start saving from £25 a month, and then choose your investments.

There are several investments to choose from, based on how long you’re planning to invest for and your attitude to risk.

You can manage your account through Hargreaves Lansdown’s app.

There are annual management charges for holding your funds: 0.45% on the first £250,000; 0.25% for funds between £250,000 and £1m; 0.1% for funds between £1m and £2m; no charge for funds over £2m. There might also be dealing charges for online and mobile app share dealing, telephone and postal share dealing, and income reinvestment.

Fees are taken monthly from your account. There's a ‘suggested minimum cash balance’ to prevent the chance of not having enough money in your account to cover the fees. If that does happen, you can add money to a Fund and Share Account, where fees will be collected if there aren’t enough in the lifetime Isa.

If there's not enough money in the Fund and Shares account, Hargreaves Lansdown will sell sufficient holdings to cover the amount owed.

If you're unsure where to invest or wish to be out of the market, it's possible to hold cash in the lifetime Isa.

There are no inactivity fees, and cash held currently receive a minimum of 1.25% interest.

The Metfriendly lifetime Isa is for all serving, retired and former Metropolitan police officers or staff, and their immediate family – so it won't be suitable if you have no ties to the police.

The account is a stocks and shares Isa, and money is invested into Metfriendly’s With-Profits fund, which is made up of equities, commercial property, bonds and cash.

At the end of each calendar year, a bonus is usually added to investments, and if you invest for more than three years an additional final bonus is usually added when you cash in your investment. Bonuses depend on the return from the With-Profits fund.

Its terms and conditions say its 'intended retail investor' should deposit £100 a month or invest a lump sum between £1,200 and £4,000.

You can transfer an existing Isa or lifetime Isa from another provider.

There are several fees to cover: a one-off 0.37% charge when entering the investment and ongoing annual costs including a 0.14% portfolio transaction fee and 1.47% management costs.

It’s been assessed as a medium-to-low-risk account but, as always, there's a chance you might lose any money you invest.

MoneyBox is an app-based investment platform, with a stocks and shares lifetime Isa that invests money via three tracker funds.

These are split into ‘cautious’, ‘balanced’ and ‘adventurous’, each with a portfolio including a cash fund, global shares fund and property shares fund.

You must pay a subscription fee of £1 per month to use the app, plus a platform fee of 0.45% of what you invest per year. Plus there are fees from fund providers, ranging from 0.12% to 0.3% of your investment. You are able to transfer existing Isas into a MoneyBox Lifetime Isa, and you can also transfer a MoneyBox stocks and shares Isa into a MoneyBox lifetime Isa.

If you transfer your MoneyBox lifetime Isa to an alternative lifetime Isa, you will be charged a £25 administration fee.

Introduced in 2021, the account was originally offered by app-based provider Nude. However Nude has now been acquired and rebranded by mortgage platform Tembo.

Tembo has scrapped the £2 monthly subscription fee previously charged to Nude users (a saving of £24 annually) but continues to charge an annual platform fee of 0.35% and an annual investment fund charge of 0.17%.

Tembo allows you to connect your bank, and gives tips on how to save for your first home more quickly. You can save jointly with your partner (if they're eligible).

The account accepts transfers.

Nutmeg is a finance app/'robo adviser' that allows you to manage your investment portfolio through your phone.

With its lifetime Isa, your funds are invested in stocks and shares (mostly exchange-traded funds). Nutmeg helps you to choose a portfolio based on your finance goals and attitude to risk.

There are four funds to choose from: Fully Managed, Smart Alpha, Socially Responsible and Fixed Allocation.

The Fully Managed Fund costs 0.75% up to £100k, 0.35% beyond, and is proactively managed by Nutmeg's investment team.

The Smart Alpha option costs 0.75% up to £100k, 0.35% beyond, and is managed by J.P. Morgan Asset Management.

The Socially Responsible fund is proactively managed, but the portfolio is tilted towards funds with high environmental, social and governance (ESG) standards; it costs 0.75% up to £100k, 0.35% beyond.

The Fixed Allocation is cheaper at 0.45% up to £100k, 0.25% beyond.

Assets are reviewed once a year, but there's no intervention other than that.

All fees are taken directly from your account on a monthly basis.

The minimum investment is £100.

The option to transfer money held in other Isas to your lifetime Isa is not yet available with Nutmeg.

OneFamily offers two investment fund options with different levels of risk.

The Global Equity Fund is for those looking to invest for more than 10 years (so probably not first-time buyers), who are willing to accept a greater risk in the hope of greater overall returns in the long run.

The Global Mixed Investment Fund is suitable for those planning to invest for at least five years, with shorter-term goals. It’s less risky, so potential returns are lower.

Both funds invest almost exclusively in collective investment schemes. As markets can fluctuate, there’s no guarantee that you’ll get back the same value of money you initially invested.

There’s a 1.1% annual management charge, and possible administrative charges for cancelling and reissuing cheques, or issuing duplicate or additional statements.

To open the account, you need to either set up a £25 direct debit, or deposit a £250 lump sum.

Payments can only be made via debit card online, or from a regular direct debit from a UK bank or building society held in your name.

Transact offers a service for professional investors managing clients’ investment portfolios.

Its stocks and shares Isa requires a quarterly wrapper fee of £3, plus additional fees as the account will be part of a portfolio. There are also charges for each transaction to buy or sell investments listed on or admitted to a stock exchange.

Charges paid to your adviser or discretionary investment manager must be paid from outside your lifetime Isa account.

Cash can be held in the Isa without being invested.

It's worth bearing in mind that the monthly government bonus is also paid in as cash, and without specific instructions to invest it, it will just sit as cash in the account.

Unity Mutual is the financial services brand of The Oddfellows friendly society.

This is a stocks and shares Isa, but capital is protected and it pays a guaranteed return of 4% on all money paid into the account (this AER might vary).

The account has been classified as a three out of seven, medium-low risk.

Government bonuses are automatically invested with the rest of your savings once they're received each month.

This account accepts Isa transfers, and to open the account you'll either need to set up a direct debit for at least £10 a month or make an initial deposit of at least £50.

How does a lifetime Isa work?

Who can open a lifetime Isa? Adults aged 18-39, although if you're opening one to help save towards a property, you'll need to be a first-time buyer (i.e. never owned a property before) if you're intending to buy the home before you turn 60.

What do I get? For every £4 you save, the government will add £1 up to a maximum of £1,000 every tax year until you turn 50 years old.

How much can I save? Up to £4,000 a year is eligible for the 25% bonus (you can add more but it won't receive a government contribution).

When is the bonus paid? The bonus is paid every month, so you benefit from compound growth (where you earn interest on your interest as well as the cash you've put in).

Can I invest in stocks and shares? Yes, you can invest in either cash or stocks and shares.

Does this sit within my overall Isa limit? Yes, your overall annual Isa limit is £20,000 in 2024-25 and will include any payments into a cash Isa, stocks and shares Isa, innovative finance Isa, or lifetime Isa.

Can I spend the money on whatever I like? Under the age of 60, no - you must use it to buy a first property worth up to £450,000. After age 60, you can spend the money as you see fit.

Are withdrawals tax-free? Yes (as with other Isas).

Are withdrawals penalty-free? It depends: if you use the money to buy a first property or withdraw after the age of 60, you won't be penalised. If you want to spend the money on anything other than your first property and you're under the age of 60, you'll be hit with a 25% penalty when you withdraw your cash.

Can I pass on my lifetime Isa to a partner? Yes, your spouse or civil partner can inherit the value of your lifetime Isa as an 'additional permitted subscription' (APS) allowance. Find out more in our guide to inheriting an Isa.

Find out more: saving for a house deposit

How do I open a lifetime Isa?

Once you've chosen a lifetime Isa provider, you'll need to apply to open an account with it directly. It's usually easiest to do this online.

You'll need to provide details including your name, date of birth, National Insurance number, address and other contact information so the provider can check you're a UK citizen and of the right age to be eligible for the account. You might need to verify your identity and address at a later stage of the application.

As with a regular Isa, you can hold multiple lifetime Isas at once. However, you can only open and pay into one lifetime Isa in each tax year.

You can also transfer money across from existing Isas. Any money you move across from previous years' Isas won't affect your overall Isa limit for that year.

How much can I pay into a lifetime Isa?

If you open a lifetime Isa you can still have a regular cash Isa, a stocks and shares Isa and an innovative finance Isa, as long as your overall contributions are within the annual Isa limit (£20,000 for the 2024-25 tax year).

As with all other Isas, your money grows tax-free.

Parents and grandparents can also pay into a lifetime Isa opened by their child or grandchild, which could be a useful part of inheritance tax planning.

If you save the maximum £4,000 a year from age 18-50 you'd receive £32,000 in government bonuses over the 32 years.

The bonus is paid on your contributions, not the overall amount saved. So, it doesn't matter what interest rate you earn if you open a cash lifetime Isa, or how your investment performs if you open a stocks and shares lifetime Isa, as the bonus is paid on what you put in.

Can I withdraw money from a lifetime Isa?

You can put your lifetime Isa savings and bonuses towards a deposit on your first property or to help fund your retirement.

Here, we explain the different ways you can take money out of your lifetime Isa.

After the age of 60

Once you hit 60 you can withdraw some or all of your money, including the government bonus, to spend as you see fit. Withdrawals are tax-free.

When buying your first home

You can withdraw some or all of your money at any time after 12 months as long as you're using it to buy your first home, and not a buy-to-let property. The property must be based in the UK and not cost more than £450,000. Withdrawals are tax-free.

Lifetime Isas are limited per person, not per home - so if you're part of a couple, you can both open a lifetime Isa and benefit from the government bonuses before buying a property together.

Unlike with Help to Buy Isas (which are no longer open to new applicants), you can use both your lifetime Isa savings and the government bonus to put down a deposit once you've exchanged contracts. The Help to Buy Isa only pays the bonus after completion, so you can't use it as part of your initial deposit to secure the property.

If the purchase falls through, or you don't use the cash to buy your home within three months after the withdrawal, the money must be returned to the lifetime Isa by your solicitor.

Find out more: how to buy a house

Under 60 and not buying a home

If you're aged under 60 and withdraw money for any reason other than buying your first property, you will face a 25% penalty on the amount withdrawn.

This means you'll lose more than just the government bonus; you'll also lose 6.25% of your own money.

The only exception to this is if you're diagnosed with terminal ill health, in which case you can withdraw all of the funds (including the bonus) tax-free and penalty-free, regardless of age.

Can I transfer a lifetime Isa?

Officially, you are allowed to transfer your lifetime Isa between providers. This should take no longer than 30 days.

However, several providers don't currently offer this service, so you should check beforehand.

It's also possible to move money from a lifetime Isa to another type of Isa. However, this counts as an unauthorised withdrawal, meaning you'd have to pay the 25% penalty if you did this.

Find the right savings account for you using the service provided by Experian Ltd. Compare and choose accounts

Should I use a Help to Buy Isa or a lifetime Isa?

Help to Buy Isas are no longer available to new applicants, but if you have an existing account you can continue to save (and benefit from the 25% bonus) until December 2030.

This advice is for people who hold an existing Help to Buy Isa.

If you want to buy within the next year and haven't opened a lifetime Isa yet, stick with your Help to Buy Isa, as funds can only be withdrawn from a lifetime Isa after 12 months.

Otherwise, a lifetime Isa might be worth considering, as you can save more money and earn a bigger bonus.

You're also not limited by a monthly deposit cap: with the Help to Buy Isa you can only save £200 per month, but with the lifetime Isa you can add cash as a lump sum.

You can use a lifetime Isa bonus towards a more expensive property. With the Help to Buy Isa, you can only buy a house worth up to £250,000 (or £450,000 in London), while the lifetime Isa allows you to buy a home worth up to £450,000 anywhere in the UK.

You can transfer money from your Help to Buy Isa to a lifetime Isa, but this will count against the lifetime Isa contribution limit for that year.

You can also choose to open a lifetime Isa alongside a Help to Buy Isa. However, you can only use the government bonus from one of these accounts to buy your first home.