Compare Investment ISAs
Save for your first home and retirement at the same time
Investment ISAs put your capital at risk & you may get back less than you originally invested
- Fund Choice: A range of portfolios for your Lifetime ISA suited to your chosen risk level and investment style
- Invest From: From £100 to £4,000.
Why we like it: Simple annual portfolio management fees of 0.45%-0.75% up to £100k. 0.25%-0.35% beyond £100k. There are some underlying fund costs and market spread charges. Easy, online setup. Start with as little as £100 up to £4,000. Plus, live chat, helpful customer support and really useful investor tools & guides. Nutmeg are regulated by the FCA & are covered by the FSCS. Lifetime ISA and tax rules apply. Capital at Risk. Approved by Nutmeg 09/08/2024
- Fund Choice: Choose between a Cash Lifetime ISA and get a competitive interest rate, or a Stocks & Shares Lifetime ISA to invest and grow
- Invest From: £1
Why we like it: Cash Lifetime ISA: Market-leading interest rate of 4.8% AER (variable). This includes a 3.8% base rate (variable) and a fixed one year bonus interest rate of 1%. Stocks and Shares Lifetime ISA: Get started with one of three options: Cautious, Balanced or Adventurous – and tailor your investments to align with your values. Earn 3.25% AER variable on any uninvested cash you hold within Stocks and Shares Lifetime ISA. Use handy Deposit Calculator to work out how much you need to save, and how long it’ll take you to achieve your deposit goal. Useful Jargon-busting First Time Buyer guides. There are additional fees charged directly by the fund provider. Please check the key investor information document (KIID) for a particular fund for more information. To open a Lifetime ISA you must be a UK resident aged 18-39. If you need to access your money for any other reason than your first home or retirement, you’ll pay the Government penalty
- Fund Choice: Over 2,000 Funds, Shares and ETF's
- Invest From: £25 per month
Why we like it: Start from £25 pm & save up to £4,000 pa. Wide choice of stock market linked investments or utilize investment ideas. Can be retained in cash. Simple annual management fee of 0.25%. Deal from £1.50 & never pay more than £5.00 per online deal. AJ Bell are regulated by the FCA & are covered by the FSCS. AJ Bell do not offer advice. Capital at risk
- Fund Choice: Over 3,000 Funds, Investment Trusts, Bonds, ETF's or Cash
- Invest From: £100 single or £25 per month
Why we like it: Easy to setup in a matter of minutes. Start with as little as £25 pm & save up to £4,000 pa. Wide choice of stock market linked investments, or can be retained in cash. Simple annual platform fee of 0.45%. Other charges may apply. Hargreaves Lansdown are regulated by the FCA and are covered by the FSCS. Capital at Risk
Please be aware we are not currently able to offer any Lifetime ISAs from Lloyds.
Who are Lloyds?
Lloyds are one of the UK’s top four biggest banks. The company’s history dates as far back as Taylors and Lloyds, founded in 1765, and they have an extensive history and reputation in the banking world.
Lloyds offer a wide range of financial services for individuals, businesses, charities and other bodies.
They offer various ISA accounts for private investors. However, at the time of writing, Lloyds do not currently offer a Lifetime ISA product.
What is a Lifetime ISA?
A Lifetime ISA (LISA) is an investment account designed for individuals saving for a deposit towards their first home.
HMRC adds 25% to all your contributions for free. You keep this 25% provided that you use your LISA for one of the two specified purposes.
If you don’t use your Lifetime ISA for your first home purchase, they can also be used for retirement savings after the age of 60 to complement your pension.
You can contribute up to £4,000 to a Lifetime ISA in the current tax year, which means you’re eligible for £1,000 free from HMRC each year.
What are the advantages of a Lifetime ISA?
Here’s a list of the main features of Lifetime ISAs so you can understand if they’re the right product for you:
- 25% Government bonus added to your contributions
- LISAs are free from capital gains tax
- LISAs are free from income tax on dividends and interest
- Investment flexibility – choose a Cash LISA or a Stocks and Shares LISA
What are the disadvantages of a Lifetime ISA?
The main negative of a Lifetime ISA is the charge applied to unsolicited withdrawals.
These are withdrawals that are not for the deposit of a first house and are before the age of 60.
You are charged 25% of your withdrawal which means this will be a greater amount than the 25% bonus you originally receive.
For example:
If you add £2,000 to a LISA, HMRC will add 25% taking you up to £2,500. However, withdrawing the full £2,500 then incurs a 25% charge on that figure, which is £625. This is deducted from your withdrawal, leaving you with only £1,875 which is less than you originally put in.
To avoid this charge, you must make sure your property fits within the LISA rules below, or you’ll need to wait until age 60 to withdraw your funds.
What houses are eligible to buy with a Lifetime ISA?
Before investing in a Lifetime ISA, it’s important to know the rules about what property you can buy to make sure your LISA funds are applicable. Here are the key factors to consider:
- You must be a first-time buyer
- You must be buying via a mortgage – you cannot use your Lifetime ISA as a cash buyer
- You must have held your LISA for at least 12 months
- Restricted to a maximum property value of £450,000
- Lifetime ISA funds cannot be used for buy-to-let properties
If your property purchase doesn’t fit within the above criteria, you won’t be able to use your Lifetime ISA funds for your deposit.
This means you’ll have to wait until age 60 before you can withdraw your LISA funds without paying the 25% charge.
Can I transfer my normal ISA into a Lifetime ISA?
If you have a standard Cash or Stocks and Shares ISA and want to get the benefits of a Lifetime ISA, you can transfer them into a LISA by completing an ISA transfer form with your LISA provider.
You will get the 25% HMRC bonus on any ISA funds you transfer into your Lifetime ISA; however, you can only transfer up to £4,000 per year as this is the annual LISA allowance.
If you have more than £4,000 worth of normal ISAs you want to transfer, you’ll need to transfer £4,000 per tax year until all your ISA funds are moved across.
Which Lifetime ISA is best?
The best Lifetime ISA for you depends on several factors – here’s a list of the most important things to consider when you are comparing Lifetime ISA providers:
- Do you want to invest in Cash or Stocks and Shares?
- For Cash LISAs, what are the interest rates on offer?
- For Stocks and Shares LISAs, what investment options are available?
- How good is the LISA provider’s customer service rating?
- What are the ongoing and ad hoc Lifetime ISA charges?
How do I apply for a Lifetime ISA?
The easiest way to open a Lifetime ISA is online. Once you have chosen a Lifetime ISA provider, go to their website and follow the instructions to create your account in minutes.
To verify your account, you’ll need to make a payment with either your debit card or via Direct Debit.
FAQs
How much can I contribute to a Lifetime ISA?
You can currently contribute up to £4,000 this tax year.
Can I have a Lifetime ISA and a standard ISA open at the same time?
Yes, if you already have a standard ISA, you can still open a LISA provided you don’t go over your combined ISA allowance of £20,000.
Can I have a joint Lifetime ISA?
No, Lifetime ISAs must be opened in an individual’s name. However, if you have a partner, they can open their own Lifetime ISA and you can put both your savings accounts towards your deposit.
Is there an age limit for Lifetime ISAs?
You must be between 18 and 39 to open a Lifetime ISA.
You can keep contributing to an existing LISA until the age of 50.
Can I transfer my Help to Buy ISA into a Lifetime ISA?
Yes, if you have an existing Help to Buy ISA you can transfer this to a Lifetime ISA.
You’ll need to complete an ISA transfer form with your new Lifetime ISA provider to get the ball rolling.
Are Lifetime ISAs tax-free?
Yes, Lifetime ISA accounts are completely free of tax.
Can I lose my money in a Lifetime ISA?
If you invest in a Stocks and Shares Lifetime ISA then your investments can fall as well as rise in value. This means you could get back less than you originally put in.
If you make unsolicited withdrawals, you could also be charged more than you have originally put in.
What happens to LISAs when you die?
Lifetime ISAs are treated as normal investments when you die, meaning that your beneficiaries will inherit them through your estate and may be liable to inheritance tax.
Can I transfer my Lifetime ISA to a normal ISA?
No, once your funds are in a Lifetime ISA you cannot transfer them out to a standard ISA. You can only transfer them to another Lifetime ISA.
Do Lloyds offer a Lifetime ISA?
Lloyds do not currently offer a Lifetime ISA product.
Frequently Asked Questions
What is the Lifetime ISA annual allowance?
£4,000 for the 2022/23 tax year.
Can I have a Lifetime ISA and a standard ISA?
Yes, you can open a LISA if you already have a Cash ISA or Stocks and Shares ISA.
Can I contribute to a Lifetime ISA if I have already used my full £20,000 ISA allowance?
No. Your Lifetime ISA allowance counts towards your total annual allowance, so if you have contributed £4,000 to a LISA then you can only contribute a further £16,000 to a standard ISA.
Can I open a Lifetime ISA at any age?
No, you must be between the ages of 18 and 39 to open a Lifetime ISA.
Are LISAs tax efficient?
Yes, any dividends, capital gains or withdrawals will be 100% tax-free from a LISA.
Can I lose money in a Lifetime ISA?
You will be charged more than the bonus you get if you make a withdrawal against the permitted LISA rules. This is because 25% of your withdrawal after the added government bonus will total more than 25% of your original contribution.
You can also lose money in a Stocks and Shares LISA if your investments fall in value.
Can I split my LISA for use between my first home and retirement?
Yes, if you do not use all of your LISA value for your first home, then you can take the remainder at age 60 without being charged.
How long can I contribute to a LISA for?
As long as you open a Lifetime ISA account before your 40th birthday you can contribute to a LISA up until the age of 50.
You will have to add money to a LISA to actually open it, in the form of a debit card payment or a Direct Debit contribution.
What happens to my LISA when I die?
If you still hold your LISA when you die, it will form part of your estate and be liable to Inheritance Tax (IHT) just like any other investment.
Can I transfer my LISA to a normal ISA?
You cannot transfer a Lifetime ISA to a standard ISA as this would be a way of avoiding the 25% charge for unsolicited withdrawals.