If you are saving for a first home in the UK, the Lifetime ISA is one of the few things that genuinely tilts the odds in your favour. The government adds money on top of what you put in. This guide explains exactly how the 25 percent bonus works in 2026, who can use it, the property price cap, and the two rules that catch savers out.
The headline: 25 percent added to your savings
A Lifetime ISA lets you save up to GBP 4,000 a year, and the government adds a 25 percent bonus on top, up to GBP 1,000 a year (source: GOV.UK Lifetime ISA overview). Pay in the full GBP 4,000 and you get GBP 1,000 added, giving you GBP 5,000 working toward your deposit. Do that consistently and the bonus alone can add up to a meaningful chunk of a first deposit over a few years.
| You pay in (per year) | Government bonus (25 percent) | Total added to your pot |
|---|---|---|
| GBP 1,000 | GBP 250 | GBP 1,250 |
| GBP 2,000 | GBP 500 | GBP 2,500 |
| GBP 4,000 (the yearly cap) | GBP 1,000 (the yearly cap) | GBP 5,000 |
Who can open one, and the property cap
You can open a Lifetime ISA if you are aged 18 to 39, and you can keep paying in until you turn 50. To use it for a first home, the property must cost GBP 450,000 or less and be the first residential property you own. Above GBP 450,000 the bonus cannot be used for the purchase, so if you are buying in a higher-priced area, check where your target sits against that cap before you rely on the bonus.
The two rules that trip savers up
- The timing clock. The account must be open for a minimum period before you can use it for a first home, so open one early even with a small amount to start the clock. Waiting until you are ready to buy can leave you unable to use the bonus in time.
- The withdrawal charge. A Lifetime ISA is for a first home or for retirement from age 60. Take the money out for anything else and a withdrawal charge applies that can leave you with less than you paid in. Only save into it what you genuinely intend to use for those two purposes.
How it fits into your deposit
The bonus goes into the pot that forms part of your completion funds. It is not a cheque you can hand over for your stamp duty bill directly, but because it boosts your deposit, it frees up your other savings to cover buying costs such as legal fees and a survey. Think of it as quietly increasing the deposit you bring to the table rather than a separate handout.
A simple plan
- Check you are eligible (aged 18 to 39, buying your first home).
- Open an account now, even with a small deposit, to start the timing clock.
- Pay in what you can afford toward the GBP 4,000 yearly limit to capture the bonus.
- Confirm your target home is at or below GBP 450,000 so the bonus can be used.
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Get the First Time Buyers Playbook, GBP 6.99Frequently asked questions
How much is the Lifetime ISA bonus?
25 percent on up to GBP 4,000 saved a year, so up to GBP 1,000 a year.
What is the property price cap?
You can use a Lifetime ISA to buy a first home costing up to GBP 450,000. Above that price the bonus cannot be used for the purchase.
Is there a penalty for taking the money out?
Yes. Withdraw for anything other than a first home or retirement from age 60 and a withdrawal charge applies that can leave you with less than you paid in.