How are the Lifetime ISA (LISA) and Help to Buy ISA different?

As of November 2019, new Help to Buy ISAs can no longer be opened. However, if you already have a Help to Buy ISA open, the main differences two types of accounts differ are as follows 👇

Yearly contribution limit:

• Lifetime ISA (LISA): £4,000

• Help to Buy (HTB): £2,400 (£3,400 in year one)

Maximum one-off deposit:

• LISA: None, you can deposit the full £4,000 annual limit in one go, should you wish

• HTB: You can deposit up to £1,000 in your first month (and £200 per month maximum after this)

Maximum bonus you can receive:

• LISA: £32,000 if maximum contributions over maximum possible time period is assumed

• HTB: £3,000

When do you get the government bonus?

• LISA: 25% of any contributions made are added to your LISA each month

• HTB: When you purchase the home

Maximum property value:

• LISA: £450,000 to withdraw penalty-free. If your first home purchase costs more than £450,000 but meets all other requirements, a 20% government withdrawal charge will apply to your withdrawal.

• HTB: Outside of London £250,000, inside London £450,000

Who can open an account?

• LISA: Those aged 18-39

• HTB: Anyone over 16, however, as of November 2019 new Help to Buy ISAs can no longer be opened

Does the account have investment options?

• LISA: Yes - choose from Cash or Stocks & Shares

• HTB: No - cash savings only

When can you use the money to buy a house?

• LISA: After the account has been open for at least 12 months

• HTB: Once you’ve saved £1,600

Can you withdraw for a reason other than buying your first home?

• LISA: After 60 - yes with no penalty. Before 60, a government penalty of 25% is applied to the withdrawal amount (except in the case of terminal illness)

• HTB: Yes, but you don’t get the bonus on any withdrawn amount

Are there any withdrawal penalties?

• LISA: Yes - a 25% penalty on non-qualifying withdrawals, or 20% if your property purchase meets all other eligibility criteria, but costs over £450,000. If you’re terminally ill with less than 12 months to live, you can withdraw without penalties.

• HTB: No - but remember, you will not receive any government bonus on amounts withdrawn