Best all-round Lifetime ISA - Hargreaves Lansdown
Hargreaves Lansdown’s Lifetime ISA is a great option for anyone comfortable with making their own investment decisions.
Fees: Service charges are on the low end at 0.25% a year if you hold funds or shares – and if you hold shares the annual fee is capped at £45. If investing in funds, you’ll also pay separate ongoing fees charged by the fund manager (these can be as low as 0.05%).
It’s free to buy mutual funds, but if you want to invest in shares or ETFs the trading fee is high at £11.95. So if you are looking to invest small amounts ad hoc in shares or ETFs, the Hargreaves Lansdown platform can work out expensive.
As an example of what you’d pay with Hargreaves Lansdown’s Lifetime ISA, if you invested £3,000 in mutual funds and £1,000 in a single ETF, you’d pay service charges of £10 a year plus the £11.95 ETF trade fee, taking costs for the year to £21.95 (ongoing charges for the mutual funds will also be charged).
Platform: I find the Hargreaves Lansdown website and app excellent, and there are plenty of guides, research, and educational material to help you choose your investments. You can also invest in ready-made portfolios set up and managed by fund managers at Hargreaves Lansdown, so you don’t have to do it yourself.
Hargreaves Lansdown pays 3% interest on cash held in your account, which is another bonus. Read more about its offering in my full review of Hargreaves Lansdown.
Lowest fees on £4,500+ savings - Dodl
| Company |
Overall Rating |
Minimum Deposit |
ISA |
SIPP |
 Dodl
|
 |
£100 |
Yes |
Yes |
Dodl is AJ Bell’s low-cost app-only investment platform that launched in April 2022. There are no trading fees and you can invest through a range of tax-free accounts through Dodl, including the Lifetime ISA.
Fees: AJ Bell’s Dodl Lifetime ISA works out the cheapest Lifetime ISA provider of the main brokers I tested, but only if you have savings of around £4,500 or more. This is because service fees are just 0.15% a year, and it’s free to buy funds and stocks. However, there is a minimum monthly fee of £1, or £12 a year.
Another bonus of Dodl is that it pays interest of around 5% on cash held in your account that isn’t invested.
If you have less than £4,500 then a broker such as Hargreaves Lansdown or AJ Bell’s main platform may be cheaper as service charges are 0.25% a year and there is no minimum fee. If you had £4,000 in a Lifetime ISA with Hargreaves Lansdown, for example, you’d pay fees of £10 a year.
Platform: The Dodl app is mainly aimed at newer or younger investors and has a more limited range of investments than the main AJ Bell platform. You can only invest in a limited range of funds or UK or US shares, but I find this enough to get started.
Best if you want wide investment choice - AJ Bell
| Company |
Overall Rating |
Minimum Deposit |
ISA |
SIPP |
 AJ Bell
|
|
£0 |
Yes |
Yes |
AJ Bell’s Lifetime ISA offers a very wide range of investments. You have the option of investing in shares, funds, ETFs, investment trusts and bonds through its Lifetime ISA. You can also invest in ready-made AJ Bell funds if you don’t want to choose your own investments, with annual charges of 0.31% for its growth funds.
Fees: AJ Bell’s Lifetime ISA is a good option whether you have low amounts in your Lifetime ISA or have been saving for a few years and have accrued savings in the thousands of pounds. The annual service fees are 0.25%, on top of fund management fees, and if you own shares or ETFs then the annual service charges are capped at £120 a year.
Ideally, you wouldn’t trade regularly with AJ Bell as trading fees are on the higher end. It costs £5 to trade shares or ETFs, and £1.50 each time you invest in a fund. In contrast, Dodl and Hargreaves Lansdown don’t charge anything at all to invest in funds.
You also have to pay a higher lump sum into AJ Bell’s Lifetime ISA than other providers. You must pay lump sums of at least £500 into your Lifetime ISA, or set up a regular payment from £25 a month. Other providers allow you to pay in lump sums from £100 or even lower. Learn more about its full offering by visiting my comprehensive review of AJ Bell.
Best for new investors - Moneybox
| Company |
Overall Rating |
Minimum Deposit |
ISA |
SIPP |
 Moneybox
|
 |
£1 |
Yes |
Yes |
My view is that Moneybox is a great option for those new to investing who like the simplicity of the Moneybox investing choices. Moneybox also has a great mobile app that makes saving and investing really easy.
Platform: Moneybox is the only provider offering both a standalone cash and investment Lifetime ISA. The cash Lifetime ISA may be more suitable if you are buying a home within the next few years and don’t want to expose your money to the ups and downs of the stock market. You can only pay into one each tax year.
Moneybox pays a market-leading interest rate of 5% on its cash Lifetime ISA for the first year, which then drops to 4% for subsequent years.
With Moneybox’s investment Lifetime ISA, you invest in one of three portfolios depending on your risk appetite: Cautious, balanced or adventurous. These portfolios contain a mix of tracker funds. For people at the start of their investment journey this can be a very good option as the structure is very simple. You can also build your portfolio, selecting your own funds or ETFs.
Fees: One downside is that Moneybox can work out more expensive than other providers. You pay an annual service fee of 0.45%, as well as ongoing fund management costs (starting from 0.08%), and you are also charged a £1 monthly fee (free for the first three months). This £1 monthly fee is expensive if you only have a small amount in the account—anything less than £3,000.
Best for simplicity - Nutmeg
| Company |
Overall Rating |
Minimum Deposit |
ISA |
SIPP |
 Nutmeg
|
|
£500 |
Yes |
Yes |
Nutmeg is another great option for investors looking for a simple investment account for their Lifetime ISA.
Platform: With the Nutmeg Lifetime ISA, you choose from a range of portfolios that have been created by its inhouse investment team. There are five investment styles that invest in different ETFs to give you a ready-made, diversified investment portfolio. You can also invest in ESG funds that prioritise strong environmental, social and governance credentials.
Fees: Service fees are 0.45% for tracker funds with minimal intervention from fund managers, or 0.75% for a managed portfolio, where Nutmeg’s investment team regularly make strategic adjustments to the funds to actively boost returns or reduce losses. There are also fund fees on top of the service fee, taking total annual Nutmeg fees to 0.68% and 1.02%. These are on the higher end compared to other providers, but you get access to a managed diversified portfolio of funds.
As Nutmeg is an automated digital investment platform, you won’t be able to pick your own funds and stocks. But for investors looking for a simple investment account, Nutmeg could be a good starting point. Nutmeg’s Lifetime ISA is designed for investments, although you can just hold cash in the account and earn 2.5% interest.
FAQs
How does a Lifetime ISA (LISA) work?
Eligibility and Rules
Lifetime ISAs can be opened by people in the UK aged 18 to 39. You can continue making contributions and receiving a bonus until the age of 50.
The earliest you can use the money held inside for a house deposit is 12 months after opening the account. If you are using the Lifetime ISA for retirement savings, the earliest you can withdraw money is age 60.
You can take money out before this but you’ll pay a 25% charge – losing the government bonus with an additional penalty.
Benefits
The main benefit of the Lifetime ISA is the 25% government bonus, which will give your savings a boost in addition to interest or investment returns. If you are using the Lifetime ISA for retirement, money you withdraw after the age of 60 will be tax-free. This means you won’t have to worry about income tax, dividend tax or capital gains tax.
Contribution Limits
You can pay up to £4,000 a year into a Lifetime ISA, an amount that hasn’t changed since Lifetime ISAs were introduced in 2017. The government will pay a bonus of 25% (up to a total of £1,000 a year). This bonus is paid monthly after the 5th of each month. This £4,000 forms part of your overall £20,000 ISA allowance. Couples can each use a Lifetime ISA towards a joint property, so you effectively get double the allowance if you are buying with a partner.
How do I open a Lifetime ISA?
To open a Lifetime ISA, simply go to the website of your chosen provider and start the application process. You’ll need your national insurance number and either your debit card details to make your first contribution or your bank details if you want to set up monthly payments. You should be able to get started almost straight away.
You can only open and pay into one Lifetime ISA each tax year. It’s possible to hold multiple Lifetime ISAs if they are opened in different tax years (6th April to 5th April). You can transfer to another provider, but some only accept transfers if you’re aged between 18 and 39.
Is a Lifetime ISA worth it?
If you are saving to buy your first home, then a Lifetime ISA is worth considering. You get a free government bonus of up to £1,000 a year.
cottageReal-world example
Personally, I hold an investment Lifetime ISA as a supplement to my pension. The fact you can withdraw money from it tax-free is appealing, especially since the alternative of pension income is subject to income tax. Although I haven’t paid into my Lifetime ISA for a few years, I keep it as a fallback option if needed. It’s important to note that you can only open a Lifetime ISA before the age of 40, so it might be wise to open one early to keep your options open.
Be aware though that you can’t use the account for a home deposit within the first year of opening the account. Additionally, you can only use a Lifetime ISA when buying a home up to the value of £450,000. This limit has been frozen since 2017 and property prices have risen by almost a third since then. If you live in London or the South East, where property prices are high, you may find you cannot use your Lifetime ISA for the home you want.
In this case, your options are to withdraw your money from the Lifetime ISA and pay the 25% withdrawal penalty or choose to keep the money in the Lifetime ISA for retirement.
A Lifetime ISA generally isn’t worth it for retirement savings if you are a higher-rate taxpayer, as you’d be able to claim 40% or 45% tax relief on pension contributions compared with a 25% bonus for the Lifetime ISA. However, a benefit of the Lifetime ISA is that you could boost your tax-free income in retirement as money withdrawn from pensions may be liable for income tax.
Which banks offer Lifetime ISAs?
The main high street banks generally don’t offer Lifetime ISAs. Savings providers offering cash Lifetime ISAs include Paragon Bank, Skipton Building Society, and Newcastle Building Society.
What’s better, a Help to Buy ISA or a Lifetime ISA?
Help to Buy ISAs are no longer available to new applicants, so you won’t be able to open one now. However, if you already have a Help to Buy ISA you can continue to pay into it until 2029, when contributions will no longer be allowed.
In general, the Lifetime ISA is better than the Help to Buy ISA because you can get a higher bonus from the government of up to £1,000 a year. With the Help to Buy ISA, the most you can get in total from the government bonus is £3,000.
Can I have a Cash ISA and a LISA?
Yes, it’s perfectly possible to have both. You can pay up to £4,000 into a Lifetime ISA, so if you are saving more than this for an upcoming house purchase then you may also want to save into a cash ISA to benefit from tax-free interest.
Be aware there is an overall limit of £20,000 that can be paid into ISAs each year. So if you pay the full £4,000 into a Lifetime ISA, you’d have £16,000 remaining to invest in either a cash ISA or stocks and shares ISA.
Why you should trust us
Elizabeth Anderson has been a financial journalist for more than a decade. She’s written for major national newspapers, contributed to corporate reports and research, and reviewed dozens of share dealing platforms, SIPP providers, ISAs, and brokerage firms. Elizabeth started her career at Bloomberg and has worked for the BBC, The Telegraph, The Times and the i newspaper. She is passionate about helping people understand finance and investing. A keen investor herself, Elizabeth invests through general dealing accounts, ISAs and several SIPPs.
Steven Hatzakis is a well-known finance writer with 25+ years of experience in the foreign exchange and financial markets. He is the Global Director of Online Broker Research for Reink Media Group, leading research efforts for ForexBrokers.com since 2016. He has served as a registered commodity futures representative for domestic and internationally-regulated brokerages. Steven holds a Series III license in the US as a Commodity Trading Advisor (CTA).
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At UK.StockBrokers.com, our online broker reviews are based on our collected quantitative data as well as the observations and qualified opinions of our expert researchers. Each year we publish tens of thousands of words of research and collect hundreds of data points while testing brokerage firms, share dealing platforms, SIPP providers, ISA providers, and other financial service providers relevant to U.K. investors.
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Our researchers thoroughly test a wide range of key features, such as the availability and quality of trading platforms for web, desktop, and mobile, charting, real-time and streaming quotes, and educational resources – among other important variables. We also evaluate the overall design of the mobile experience, and look for a fluid user experience moving between mobile and desktop platforms.
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