Lifetime ISAs explained

Our Lifetime ISA is an Individual Savings Account that gives you a 25% Government bonus on payments into the account each month, up to a maximum balance of £4,000 annually and you don’t pay tax on your interest.

The Lifetime ISA is only suitable for savers planning to buying their first home or who are saving later life as there are penalties for withdrawing it for any other reason, unless you’re diagnosed with a terminal illness. It is a Government initiative to support first time buyers on to the ladder and also to help you save towards your retirement. 

Before applying for a Lifetime ISA please read the Key Feature Document and Key Product Information including terms and conditions.

Below we aim to answer all the burning questions you might have about Lifetime ISAs.

Who is eligible for a Lifetime ISA?

The Lifetime ISA can be opened by customers aged between 18 and 39 years of age that reside in the UK to either save for their retirement or their first house purchase.

Is a Lifetime ISA right for me?


A Lifetime ISA is worth considering if:
  • you’re saving for your first house with no plans to buy in the next 12 months
  • you want to save more for post-60 later life and help boost your savings for retirement 

If you’re saving for something else a Lifetime ISA might not be the best account for you. Consider one of our easy access or shorter term savings accounts.

How much can I save with a Lifetime ISA?

You can pay up to £4,000 per financial year (April 6 - April 5) into a Lifetime ISA and the government will pay a 25% bonus on a monthly basis, on any funds deposited in the previous month. When you turn 50 you can no longer pay into the account and the government bonus will stop, however, you will still receive interest on the balance.

Can I have multiple Lifetime ISAs?

Yes, however, you can’t pay into more than one Lifetime ISA in the same financial year (April 6 - April 5).

I already have a Cash ISA - is that okay?

Yes that’s fine. You can have an ISA alongside your LISA, however, the deposits across your ISA/LISA count towards your overall ISA allowance. Each tax year, which runs from 6th April to the following 5th April, there is a limit on how much money you can put into an ISA. This is called your ‘ISA allowance’. For the 2018/19 tax year, your ‘ISA allowance’ is £20,000. You can choose how to divide your annual ISA allowance between LISA and other cash ISAs you have with The Nottingham. Check out our ISA products here.

What happens if I change my mind?

You can close your Lifetime ISA account without incurring a withdrawal charge if you advise us in writing within 30 days of opening the account. We will return your money and you will be treated as if you had never opened the account (meaning you would still be eligible to open a Lifetime ISA in the same tax year if you wanted to).

After 30 days then the government's 25% withdrawal charge will apply to any withdrawals that are not a 'permitted life event'.

What's the interest rate for the Lifetime ISA?

In addition to the 25% Government bonus, the account has an annual tax-free interest rate of 1.00% (AER). Interest will be paid annually on 5 April.

When can I withdraw from my Lifetime ISA?

Lifetime ISAs are intended for two distinct savings goals - saving to buy your first home, and/or saving for your retirement.

You will be charged a Government withdrawal charge of 25% of the amount you withdraw if you try to withdraw your money for any reason other than buying your first home, from the age of 60, if you are terminally ill or in the event of your death.

The Lifetime ISA withdrawal charge is designed so that the Government recovers the bonus and any investment growth received. As such, your capital may be reduced and the amount you get back may be less than you paid in, before both interest and bonus.

HMRC have provided some tables and examples to help explain how the charges are applied and useful scenarios which are detailed in the Key Feature Document to explain how this works.

What if I need to withdraw my money?


Lifetime ISAs are a longer-term savings product. The Lifetime ISA withdrawal charge is designed so that the Government recovers the bonus and any investment growth received. As such, your capital may be reduced and the amount you get back may be less than you paid in, before both interest and bonus.

You can withdraw your savings and bonus without charge in all the below instances:
  • to buy your first home (max £450,000 property price), a minimum of a year after your first deposit
  • when you turn 60 years-old
  • if you are diagnosed with a terminal condition with less then 12 months to live 
  • in the event of your death


Can I have a joint Lifetime ISA?

No, an ISA in an Individual Savings Account so it must be opened by an individual.

How do I apply for a Lifetime ISA?

We are currently offering Lifetime ISAs through our branch network so simply give us a call. You will need to bring your ID, National Insurance number and initial cash deposit (£10 minimum).

Once you have opened your Lifetime ISA in branch then you can make further deposits into the account electronically. You can make as many deposits as you want in each financial tax year up to the £4,000 maximum allowed.

If there isn’t a branch near you, register your interest online and we’ll let you know as soon as we launch our online application process.

How do I withdraw from my Lifetime ISA when I buy my first home?


There is no restriction on which stage of the property purchase you can withdraw your Lifetime ISA funds or on how many withdrawals you can make. 

You will need to tell your conveyancer that you are using all or part of your Lifetime ISA to buy the property and they will ask you to provide them with a declaration. Your conveyancer also has to provide us with a declaration and you must make sure they do this as part of the buying process. Once we receive the paperwork we will pay the amount requested to the conveyancer within 30 days. No Withdrawal Charge will apply.

If your purchase does not complete within 90 days of the withdrawal, your conveyancer must tell us and return the amount withdrawn to a cash Lifetime ISA with The Nottingham within 10 working days, unless your conveyancer applies for an extension under the ISA regulations.

For more information on how to use the funds for your first home, visit lifetimeisa.campaign.gov.uk to learn more about the process or read our terms and conditions

What's the definition of a first time buyer?

The government definition of a first-time buyer is a resident in the United Kingdom for tax purposes who has never purchased a house or been on the deeds of a house. For the full definition, visit helptobuy.gov.uk/help-to-buy-isa/faq.

Is a Lifetime ISA a good way to save for my retirement?

We can't give you advice on whether the account is suitable for you as a retirement fund. 

A cash Lifetime ISA may not be the best option for your retirement savings. If you are thinking about one as a way of boosting your retirement savings then you should think about when you intend to retire, what other provisions for retirement you are making (such as a pension) and whether a Lifetime ISA will help you meet your savings goals (for example will it help provide sufficient income in retirement).

A financial adviser will be able to help you map out the best route to plan for your retirement.

What if I want to retire later?

This won’t affect your Lifetime ISA, it just means you’ll have access to your Lifetime ISA before you retire. As it’s based on age rather than retirement age, you can withdraw it at 60, transfer to another savings account or leave your funds in your Lifetime ISA account.

What happens if I become ill?

If you become ill, please liaise with us to discuss your options but withdrawal fees aren’t charged to those diagnosed with a terminal illness with less than 12 months to live.

Which provider should I choose to open my Lifetime ISA with?

There are currently only two building societies offering the Cash Lifetime ISA. The Nottingham is the only provider to offer LISAs on the high street with a face-to-face, in-branch service. In addition to this, The Nottingham has some of the best customer satisfaction scores in the industry and our fantastic Member Rewards programme is another reason to choose The Nottingham to open your Lifetime ISA. Once you have a savings balance of at least £500 and have held your Lifetime ISA account for 12 months, you will have access to Member Rewards. Our membership benefits include free, whole-of-market mortgage advice, discounts on home insurance and estate agency fees plus access to independent financial advice (provided by Wren Sterling).

If you have any further questions, the government has created a wealth of content around the Lifetime ISA product – simply visit lifetimeisa.campaign.gov.uk. Alternatively find your nearest Nottingham Building Society branch and pay them a visit.

You can view the Lifetime ISA product here.

Sign up to our newsletter

We regularly send out newsletters with product information, advice on improving your finances and top tips. If you would like to receive this please sign up to our newsletter, which you can unsubscribe from at any point.

Join us on Facebook

Get updated on our latest competitions and share your news with us.