Lifetime ISA Calculator
The Lifetime ISA gives first-time buyers and retirement savers a 25% government bonus on up to £4,000 per year. But withdraw for the wrong reason and you'll lose more than the bonus.
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Opened by over 600,000 people since 2017, the LISA is one of the most generous savings incentives available — but also one of the most misunderstood. The 25% withdrawal penalty on non-qualifying withdrawals actually costs you more than just the bonus, eating into your own contributions too.
Use the calculator below to project your LISA growth, see the total government bonus over time, and understand exactly what you'd lose if you needed to withdraw early.
Lifetime ISA Calculator
Project your LISA growth with the 25% government bonus, and see the penalty for non-qualifying withdrawals.
Must be 18-39 to open a LISA
Maximum £4,000 per tax year
LISA Projection
Your Contributions
£100,000
25 years
Government Bonus (25%)
£25,000
£1,000/year
Interest Earned
£107,853
Total LISA Value
£232,853
No penalty — qualifying first home purchase
You'll receive the full £232,853 tax-free.
| Age | Paid In | Bonus | Total Value |
|---|---|---|---|
| 26 | £4,000 | £1,000 | £5,225 |
| 30 | £20,000 | £5,000 | £28,584 |
| 35 | £40,000 | £10,000 | £64,206 |
| 40 | £60,000 | £15,000 | £108,597 |
| 45 | £80,000 | £20,000 | £163,916 |
| 50 | £100,000 | £25,000 | £232,853 |
The LISA 25% withdrawal penalty is calculated on the total amount withdrawn, not just the bonus. This means you effectively lose 6.25% of your own contributions on top of losing the full bonus. Only withdraw early if you truly have no alternative.
What this means for your first home
The 25% bonus is genuinely free money: max it out at £4,000/year and HMRC adds £1,000 on top, every year until you're 50. Two LISAs in a couple = £2,000/year in bonuses alone, on top of any growth from a Stocks & Shares LISA.
The £450,000 property cap is the catch — fine in most of the UK, tight in London and the South East. And withdrawing for any non-qualifying reason triggers a 25% penalty that actually costs you more than the bonus. If you might not buy below £450k or before age 60, run your numbers through an ISA Calculator first.
Understanding the Lifetime ISA
Who Should Open a Lifetime ISA?
The LISA is designed for two purposes: saving for your first home or retirement. It's most valuable for first-time buyers aged 18-39 who are saving for a property under £450,000, and for people who want tax-free retirement savings alongside (or instead of) a workplace pension.
LISA vs Pension for Retirement
Both offer government incentives, but they work differently. A pension gives tax relief at your marginal rate (20-45%) but is taxed as income when withdrawn. A LISA gives a flat 25% bonus and withdrawals are tax-free from age 60. For basic rate taxpayers, the effective benefit is similar. For higher rate taxpayers, a pension is usually more tax-efficient — unless you expect to be a higher rate taxpayer in retirement too.
The Withdrawal Penalty Trap
The 25% penalty on non-qualifying withdrawals is widely misunderstood. Many people think they'll just lose the bonus — but the maths is worse than that. A 25% charge on the total (contributions + bonus + growth) means you lose all the bonus AND 6.25% of your own contributions. For example, if you contribute £4,000 and receive a £1,000 bonus (£5,000 total), the penalty would be £1,250 — meaning you'd get back only £3,750 of the £4,000 you put in.
Cash LISA vs Stocks & Shares LISA
Cash LISAs offer a fixed interest rate — good for short-term savings (e.g., buying within 1-3 years). Stocks & Shares LISAs invest your money — potentially higher returns over 5+ years, but with risk. If you're saving for a home purchase within 2-3 years, a Cash LISA is generally safer.
Frequently Asked Questions
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