What is the difference between a Help to Buy ISA and a Lifetime ISA?
Although they seem similar, Help to Buy (H2B) ISAs and Lifetime ISAs (LISAs) have some key differences.
Help to Buy ISAs are designed for first time home buyers aged over 16, while Lifetime ISAs are open to to adults aged between 18 and 40 to help them save for a first home or for their retirement.
Although Help to Buy ISAs closed to new applicants on 30 November 2019, you can still save into the ISA until 30 November 2029 and should be able to transfer funds in from another ISA.
Here’s a rough idea of how they compare.
Help to Buy ISA | Lifetime ISA | |
Age limit when opening | 16+ (not open to new applicants) | 18 to 39 (Unable to pay into ISA from age 50) |
First-time buyers | ✓ | ✓ |
Retirement | x | ✓ |
Can help to buy homes costing | Up to £250,000 or £450,000 in London) | Any amount, but if the property costs more than £450,000, you'll pay a 20% withdrawal charge |
Maximum bonus percentage | 25% | 25% |
Maximum bonus amount | £3,000 in total | £1,000 per year (if you save the maximum £4,000 per year) |
When is the bonus paid | When buying a home | Monthly |
Funds available | On completion | On exchange of contracts |
Charges | None | 25% charge if you withdraw before age 60, or for any reason other than buying your first home |
From April 2029, the Lifetime ISA will be replaced for new savers by the First Time Buyer ISA.
It will keep the £4,000 yearly limit and 25% government bonus, but with no upper age limit.
The bonus will be paid when you withdraw the money to buy your first home (worth up to £450,000), so there’s no withdrawal charge. If you already have a Lifetime ISA, you can keep paying in and using it under the current rules.
Which one is best for me?
That depends on your circumstances. You now can’t open a new Help to Buy ISA, but you can continue paying into an existing one until November 2029.
So, if you are eligible and want to open a new ISA, you’ll only be able to get a Lifetime ISA.
If you already have a Help to Buy ISA, you can also get a Lifetime ISA and save into both accounts, if you wish. You’ll have to stick to the overall ISA limits as set by the government though.
But you should know you’ll only be able to claim one bonus towards the purchase of your first home.
You can use your Lifetime ISA to save for retirement as well as for a house purchase, but if you have both and use your LISA for your house purchase, you won’t be able to claim the Help to Buy ISA bonus of £3,000.
The biggest difference between the two types is that you can save £4,000 a year in a Lifetime ISA, compared with £2,400 in a Help to Buy ISA, with a potentially bigger bonus.
If you can save this amount every year, it could put you on track for a bigger and quicker bonus when compared to a Help to Buy ISA.
What if I want to invest?
A Stocks and Shares ISA allows you to invest in funds or buy your own shares without having to pay income tax or capital-gains tax on money you earn from your investment. Think of it as a tax-efficient investment account.
You can hold stocks and shares or cash, or a mix of both, in a Lifetime ISA. And you can transfer funds from a stocks and shares ISA into a Help to Buy ISA, provided you don’t exceed your monthly deposit limits.
You can also have a separate stocks and shares or cash ISA, so long as the total value of your savings doesn’t exceed the limit for the tax year.
The savings limit for the 2026/27 tax year is £20,000.
But remember, particularly if you are planning on buying a home with what’s in your ISA, the value of stocks and shares can go up and down and shares are generally thought of as a long-term investment.
Are there any age limits I should consider?
Help to Buy ISAs were open to anyone aged over 16. Lifetime ISAs however, can only be opened by adults aged 18 to 39.
There are other age limits to consider for Lifetime ISAs, for example:
You can only pay into the savings accounts until the age of 50
You’ll be charged 25% of your savings if you take money out before turning 60 (unless it’s to pay for a first home)
Can I have both?
Yes. You can save money in four different types of ISA, so long as you don’t exceed the current ISA savings limit. Types of ISA include:
If you have both a Help to Buy ISA and Lifetime ISA, you’ll only be able to claim one bonus towards the cost of a new home.
Can I transfer money between the two types of ISA?
Not only can you transfer money between a Help to Buy and Lifetime ISA, but you can also transfer savings from one provider to another. There are a few things to bear in mind:
If you want to transfer money that you’ve invested into an ISA during the current tax year, you’ll have to transfer all of it
If you want to transfer money from a Lifetime ISA before the age of 60, you’ll have to pay a 25% withdrawal fee (unless it’s to pay for a first home).
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What our expert says...
“While you can transfer your savings from a Help to Buy Isa to a Lisa without charge, any funds that you move will be subject to your Lisa's annual deposit limit, which is currently £4,000.
"If you wish to transfer more than £4,000 from a Help to Buy Isa to a Lisa, then you will need to space out the payments over several years to stay within the annual payment limit. This could mean that you have to wait some time before using your Lisa to purchase your first home, which may not be suitable for someone hoping to move forward with their purchase quickly.
"Additionally, it's important to be aware that Lisas have charges if you withdraw from it before you turn 60 without using it to buy a first home.”