Important information
Tax treatment depends on your individual circ*mstances and may be subject to future change.
Your capital is at risk. All investments carry a degree of risk and it is important you understand the nature of these. The value of your investments can go down as well as up and you may get back less than you put in.
If you’re saving for your first home or retirement, a Lifetime Isa is a great way to get started. We list the providers with the best interest rates and investment platforms.
Lifetime Isas (Lisas) are long-term investments – which is why if they’re used correctly they can accelerate your plans to join the property ladder or grow your pension pot.
This is because you could earn up to £1,000 from a government bonus each year. So, if you think this is the best place to invest then we’ve listed some of the top Lisas on the market.
In this article we outline:
- The best ready-made Lifetime Isas
- The best self-invested Lifetime Isas
- How does a Lifetime Isa work?
- Is a Lifetime Isa worth it?
This article contains affiliate links that can earn us revenue*
Read more: Best stocks & shares Isas
What type of Lifetime Isa do I need?
When opening up a Lisa you can choose to save or invest your money.
Saving your deposit means you’ll open up a cash version of your Lisa, which will earn a guaranteed interest rate. The benefit of a cash Lisa is that you’ll be able to know how much interest you’re earning, which can be handy if you want to gauge how long it’ll take before you can afford a deposit on a home.
Most cash Lisa rates are variable, so they can fluctuate at your provider’s discretion.
If you’re a long way off your deposit, or if you’re planning to build your pension then you may wish to consider investing your money instead. Through a stocks & shares Lisa you won’t earn a guaranteed interest rate, but you have the potential to out-perform the best cash equivalents on the market.
However, you could lose money and end up with less than you invested.
As you’ll notice below, if you want to choose a Lisa there are multiple options. If you prefer leaving the investing to a qualified professional, then you can choose a ready-made portfolio which is managed on your behalf. Otherwise self-invested options can give you complete control over your investments.
Read more: How can I use a Lifetime Isa to buy a house?
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Best Ready-made Lifetime Isas
Below, we round up the best ready-made lifetime investment Isas. We assume that savers will be investing for a minimum of five years.
Key features:
– Fund costs: 0.21%
– Platform charge: up to 0.45%
Nutmeg’s Fixed Allocation portfolio is well documented across our site and, in a nutshell, it is an excellent low cost option which balances your risk to suit your investment goals. Other portfolios are available, but they do command higher fees.
The Fixed Allocation portfolio isn’t reviewed as frequently as some of Nutmeg’s other options, which helps to keep its costs relatively low.
Nutmeg recently won the highly commended award at the Times Money Mentor Awards for the best ready-made stocks and shares Isa.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circ*mstances and may change in the future. Fund costs correct as of 27 March 2024.
Key features:
– A single charge of 1.5% of your portfolio each year
– Reduces to 1% after ten years
Foresters Financial have two types of lifetime Isas, a Stakeholder Lifetime Isa and a Shariah Lifetime Isa. Both Isas are invested in funds managed by Schroeders, an asset management company.
The Shariah Lifetime Isa is unique as it’s one of the only accounts to comply with Sharia law. Specifically, its fund won’t invest in any companies where more than 5% of its income is from gambling, alcohol, tobacco, pork related products and other activities.
The Stakeholder Lifetime Isa, meanwhile, allows you to invest in two medium-risk funds. One places significance on investing in companies with strong environment, social and governance (ESG) factors. Both accounts will invest no more than 60% of your money in shares.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circ*mstances and may change in the future.
Key features:
– A single Annual Management Charge of 1.1% applies
Unlike some of the other providers on this list, OneFamily rolls up all its charges into a single fee. This keeps things simple, much like your choice of investments. When you open your account you’ll be able to choose between two different funds, the Global Equity Fund and the Global Mixed Fund.
The Global Equity Fund is a climate-focused investment and spreads your money across companies looking to reduce its impact on the climate. The Global Mixed fund, meanwhile, doesn’t use a climate scoring system to select its investments.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circ*mstances and may change in the future.
Key features:
– Trade costs: Only foreign exchange charges on individual US shares. This could be between 0.25% and 0.75% of the trade
– Platform charge: 0.15% (Minimum £1 a month)
Dodl by AJ Bell is a great option if you’re a novice investor. This is largely due to its app, which is simple to use and includes an education section to help you learn more about your investments.
Within Dodl you’ll have access to AJ Bell’s ready-made funds and hand-picked ETFs. These funds include the “Growth” options for those looking for long-term gains. Of these options, the “Responsible Growth” fund is a great choice for those who want to invest in companies taking their commitment to people and the planet seriously.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circ*mstances and may change in the future.
Best Self-invested Lifetime Isas
Our picks include an option from AJ Bell and Hargreaves Lansdown.
Key features:
– Platform fee: 0.25% (Capped at £42 a year)
– Cost per share trade: £3.50 to £5.00
– Cost per fund trade: £1.50
If you’re looking for a low-cost provider, then AJ Bell may just be the option for you. While its platform fee of 0.25% is the same as Hargreaves Lansdown, it becomes a cost-effective option if you’re regularly trading shares month.
AJ Bell has recently reduced its price per share trade to £5. However, if you’re an active investor who made more than 10 trades in the previous month this reduces to £3.50 a trade
By partnering with AJ Bell, you’ll also gain access to a range of different investment options. This includes more than 2,000 funds and a range of stocks from various international markets.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circ*mstances and may change in the future.
Hargreaves Lansdown Lifetime Isa
Best for: Customer experience
Key features:
– Platform fee: 0.25% (Capped at £45 a year)
– Cost per share trade: £5.95 to £11.95
– Cost per fund trade: Free
Unlike its other accounts which accrues a 0.45% charge, Hargreaves Lansdown sets the platform charge on its Lifetime Isa to 0.25%. This means it is competitively priced in a market with limited stocks and shares Lifetime Isa providers.
However, the kicker comes with its share dealing charges. Buying or selling UK and overseas shares, investment trusts, exchange-traded funds, gilts and bonds costs £11.95 each if you make less than nine in the previous month.
This makes it more than double the cost of AJ Bell’s dealing fee. But, funds don’t have any dealing charges which is better than the £1.50 charge from AJ Bell.
Hargreaves Lansdown also comes with the benefit of offering a wide range of investment options. You’ll be able to choose from over 3,000 funds and several shares across international markets.
Capital at risk. Isa rules apply. The tax treatment of your investment will depend on your individual circ*mstances and may change in the future.
What’s the difference between AJ Bell and Dodl by AJ Bell?
When comparing your options, it’s important not to confuse AJ Bell with Dodl by AJ Bell.
While owned by the same company, the latter is aimed at more novice investors and offers a simplified range of investing options. For example, it only allows you to invest in 80 different shares and limits your fund choice to AJ Bell branded choices. In contrast, AJ Bell allows you to invest in more than 2,000 funds and a range of shares from various international markets.
Stocks such as Apple and Aston Martin are both available on Dodl by AJ Bell, so if you’re keen to stick with known companies then the smaller choice might not be of great significance to your portfolio.
However, its pricing strategy does differ so, depending on the type and value of your investments, you might wish to consider transferring accounts.
With Dodl by AJ Bell, your custody charge is set at 0.15% or a minimum of £1 a month. AJ Bell, meanwhile, doesn’t have this minimum cap but a higher custody charge of 0.25%.
This means someone with a portfolio of £4,000 would pay £10 a year to AJ Bell in custody fees but £12 to Dodl by AJ Bell. However, someone with a greater portfolio of £6,000 would pay £15 a year to AJ Bell but just £12 to Dodl by AJ Bell for these charges.
This is, however, an oversimplified example. Dodl by AJ Bell doesn’t include ongoing fund charges in its custody charge while AJ Bell does so, depending on your investments, you might end up paying more than the 0.25% if you opted for Dodl by AJ Bell instead.
What about trading fees?
It’s also important to consider trading charges too. One of Dodl by AJ Bell’s biggest advantages is that it doesn’t charge any dealing fees for buying and selling its investment options. Instead, you’ll be charged for the following:
- UK shares – stamp duty of 0.50% of the value of your shares you’re buying. Dealings over £10,000 incur an added £1 charge from the government
- US shares – a foreign exchange fee of 0.75% on the value of your purchased shares up to £10,000. Anything more incurs a slightly lower charge
- Funds – as mentioned above, remember to consider the ongoing charge
AJ Bell, by comparison, will charge you a set fee for buying and selling its shares or funds. These are ordered as follows:
- UK and US shares – £9.95 (reducing to £5.00 from 1 April 2024)
- If you make more than 10 trades a month – £4.95 (reducing to £3.50 from April 1, 2024)
- Funds – £1.50
If you’re the type of investor who makes their entire lifetime Isa allowance in one go then a one off charge for dealing might not be too significant. But if you’re an active trader, then Dodl by AJ Bell might be worth considering.
Best Cash Lifetime Isas
Moneybox currently offers the best cash Lisa rate on the market at 4.4%. This is made up of a 3.5% variable and 0.9% fixed for one year.
Based on Moneybox’s calculations, if you made a deposit of £1,000 you’d earn just over £300 in interest and a government bonus by the end of the year.
| Provider | Account name | Interest rate (AER) | Min/max deposit | Account access | |
|---|---|---|---|---|---|
 | Cash Lifetime ISA | 5.00% | £1 / £1,000,000 | MobileBanking / Mobile | |
 | Cash Lifetime ISA | 4.30% | £1 / £0 | MobileBanking / Mobile | |
 | Lifetime ISA | 3.79% | £1 / £400,000 | Branch / Post / Online | |
 | Cash Lifetime ISA (Issue 3) | 3.51% | £1 / £500,000 | Online / Post / Telephone | |
 | Online Lifetime ISA | 3.30% | £1 / £750,000 | MobileBanking / Online / Mobile |
Powered by data from Savings Champion
How does a Lifetime Isa work?
Lisas allow people to save up to £4,000 in a tax year. The government tops up savings with another 25%, up to a maximum of £1,000 in a tax year.
To open a Lisa, savers must be over 18 and under 40 years of age. People are allowed to carry on paying in and get government bonuses until they reach the age of 50.
The money can only be withdrawn to be used for the deposit on a first home worth up to £450,000, or for retirement, in which case it can’t be touched until the age of 60.
The Lisa allowance is part of the standard Isa allowance, which currently allows people to stash up to £20,000 a year in their tax-free savings accounts.
That means anyone putting the maximum £4,000 into a Lisa will only be allowed to put £16,000 into standard Isas in the same year.
Want to retire early? Learn how to make the most of your Isas.
Is a Lifetime Isa worth it?
Anyone aged between 18 and 40 who is yet to own a home or start a retirement fund could benefit from saving into a Lisa.
For home buyers, if you save the maximum £4,000 into your Lisa for ten years, you’ll earn £10,000 from the government. That could make the difference between being able to buy a home or not.
However, this added bonus does come with an important condition. If you decide to withdraw your money for other uses, the government has a 25% withdrawal charge. This means you can end up with less money than you put in.
To see how, consider this example:
You invest the full £4,000 into a stocks & shares Lisa and earn £1,200 over the first year. You decide to withdraw the entire £5,200, which incurs a 25% charge. This amounts to £1,300, leaving you £100 worse off than when you started.
If you’re saving for retirement, remember that you can’t make any more contributions towards your Lisa after the age of 50. That also means no more government bonuses, so your only option is to wait for your pot to grow until you can access it at retirement.
As an example retirement pot, here’s what savings worth £100,000 could give you.
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