If you're between 18 and 39 years old and planning to buy your first home or build a retirement nest egg, then don’t underestimate the benefits of a Lifetime ISA (LISA). With the government adding a 25% bonus to contributions, it's an opportunity worth exploring. 

Whether you’re looking for a Cash LISA with the highest interest rate or a Stocks and Shares LISA with the lowest fees, we will compare some of the best Lifetime ISA accounts currently available so that you can make an informed decision.

What is a Lifetime ISA?

For those new to this concept, a Lifetime ISA (LISA) is a type of ISA (Individual Savings Account) designed specifically to help either first time home buyers or retirement savers. As with other types of ISAs, any capital growth or interest you earn is tax-free but unlike other ISAs, the government also adds a 25% bonus to any contributions you make (up to a max bonus of £1,000 per year). You can choose between 2 types of LISAs, namely a:

• Cash LISA which allows you to deposit funds and earn interest tax-free.
• Stocks and Shares LISA which allows you to invest and potentially grow your capital through stocks, funds, bonds and the like.

What are the Lifetime ISA Rules?

Here are some important LISA Rules you should be aware of:

• LISAs may only be opened by UK residents aged 18–39. You may continue to contribute - and receive the government bonus - up to the age of 50.
• You may only contribute to one LISA per tax year, a Cash LISA or Stocks and Shares LISA, you cannot have both.
• You may contribute up to a maximum of £4,000 per year (with the government adding a maximum of £1,000 per year). 
• Contributions to your LISA count toward your overall ISA allowance (£20,000).
• You can only withdraw the money to buy your first home (up to £450,000) or for retirement (after age 60).
• Non-qualifying or early withdrawals face a 25% penalty.

While a LISA also presents a great opportunity for retirement savers, we think this is the best ISA for first time buyers who will be buying an eligible first property. Let’s compare some of the top Lifetime ISA providers.
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Lifetime ISA Comparison

We will compare some of the most competitive options across both types of LISAs, starting with:

The Best Cash Lifetime ISA

Let’s take a closer look at each:
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‍Tembo Lifetime ISA‍

With the highest underlying interest rate we have found, Tembo is offering 4.6% AER (variable). With the addition of the 25% government bonus, that means you could potentially earn up to 29.6% on your contributions. 

Interest is paid out monthly and you may open the account with as little as £1 while subsequent contributions need to be a minimum of £10. Everything is accessible via the user-friendly Tembo app.

This is the best Cash LISA for those who want to jump straight to the highest underlying interest rate.

‍Go to the Tembo Lifetime ISA
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MoneyBox Lifetime ISA

With a strong focus on first time buyers, Moneybox is offering the highest of all the introductory Lifetime ISA interest rates at 4.7% AER (variable). This drops to 3.55% after the first year. With the addition of the government bonus, you could earn up to 29.7% on your money in year 1.

Interest is paid out monthly and you can open your LISA via the MoneyBox App with a deposit of just £1.

This is the best Cash LISA for new customers who want to take advantage of the highest introductory rate and are open to switching later for better underlying rates. 

‍Go to the MoneyBox Lifetime ISA
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Paragon Bank Lifetime ISA - Issue 3

If you aren’t a fan of phone apps, then Paragon Bank might be the option for you. Offering an interest rate of 3.51% AER (variable), this LISA is accessible online. Adding in the government bonus, you could earn up to £285.10 for every £1,000 you contribute (25% bonus + 3.51% AER = 28.51%). 

This is the best Cash LISA for those who prefer accessing investments online and want a relatively competitive interest rate. 

‍Go to the Paragon Bank Lifetime ISA
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The Best Stocks and Shares Lifetime ISA

Let’s take a closer look at each:
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‍Hargreaves Lansdown Lifetime ISA‍

HL’s LISA is for those seeking the broadest range of investment options combined with extensive resources, tools and support. HL also offers one of the highest interest rates on uninvested cash sitting in your LISA.

You can open an HL LISA online with a minimum deposit of £100 or by setting up monthly contributions of £25 (direct debit). Subsequent contributions must be at least £100 each. 

You can manage the LISA online or via the HL app. With an HL LISA, you can manage investments yourself or leave it to the HL experts with a Ready-Made option (at an additional cost).
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Hargreaves Lansdown Lifetime ISA charges:

Account Charges:

• Funds - 0.25% up to £1m, 0.1% between £1m - £2m, 0% above £2m (Additional OCFs may be charged by specific funds)‍
• Shares - 0.25% (capped at £45 per year)

Dealing Fees:

• Funds - £0
• Shares, ETFs, ITs, gilts and bonds - £11.95 (with reduced rates for frequent traders as below)

At the time of writing, for any cash within your Stocks and Shares LISA, you can earn the following interest rates. These will fluctuate.

The HL Stocks and Shares LISA is a premium option for the DIY investor looking for a broad array of investment options with a competitive interest rate on uninvested cash holdings.

‍Go to the Hargreaves Lansdown Lifetime ISA
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AJ Bell Stocks & Shares Lifetime ISA‍

If you’re looking to choose your own investments while keeping the platform and dealing charges low, the AJ Bell LISA is one to consider.

You can open this LISA with a minimum lump sum of £250 or regular monthly contributions of at least £25 by direct debit.

While you can select from a vast range of investments across 25 markets, including the AJ Bell Funds, you can also leave it to the AJ Bell experts with one of the Favourite Funds or choose from their pre-made Starter Portfolios. 

‍AJ Bell Lifetime ISA charges:

Account Charges:

• Funds - 0.25% up to £250k, 0.1% between £250k - £1m, 0.05% between £1m - £2m (Additional OCFs may be charged by specific funds)‍
• Shares - 0.25% (capped at £42 per year)

Dealing Fees:

• Funds - £1.50
• Shares, ETFs, ITs, gilts and bonds - £5.00 (with reduced rates for frequent traders as above)‍

Currently, you can earn the following interest rates on any uninvested cash within your Stocks and Shares LISA. Rates will change over time.

The AJ bell Stocks and Shares LISA is best for DIY and more hands-off investors looking for competitive custody and dealing fees.

‍Go to the AJ Bell Lifetime ISA
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Last Word

We hope this has helped you compare Lifetime ISA providers and find the very best LISA in line with your goals. Keep in mind that the deadline for using your 2024/2025 ISA allowance is midnight on 5 April 2025. If you enjoyed this, you may wish to learn about the best Stocks and Shares ISAs ,the best Cash ISAs or the best Junior ISAs. If you’re a client and have any questions, please reach out to your accountant. If you’d like to work with us and become a client, please fill in the form on this page.

Remember, when you invest in stocks & shares ISAs your capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future. The value of your investments may go down as well as up. You may not get back all the money that you invest. This communication is not intended to be a personal recommendation. If you are unsure about the suitability of an investment product or service, you should seek advice from an authorised financial advisor.