FIRE Finance

LISA Calculator UK

Calculate your Lifetime ISA government bonus and how much your LISA could be worth at age 60.

Your LISA Details

LISAs are available to UK residents aged 18–39. You can contribute up to £4,000 per year and the government adds 25% (up to £1,000 per year).

Must be 18–39 to open a LISA

Maximum £4,000/year

6–7% for global index funds

What Is a Lifetime ISA (LISA)?

The Lifetime ISA is a government savings account launched in 2017 for UK residents aged 18–39. You can contribute up to £4,000 per tax year and the government adds a 25% bonus — up to £1,000 of free money every year. The bonus is paid monthly. The money must be used for one of two purposes: buying your first home (property up to £450,000) or retirement from age 60.

For FIRE purposes, the retirement LISA is the relevant use. A Stocks and Shares LISA held in global index funds from age 25 to 40 (when contributions stop) then compounding until 60 can produce a substantial tax-free fund, supercharged by the government bonus.

Is a LISA Better Than a SIPP?

For basic rate taxpayers, the LISA's 25% bonus is mathematically identical to basic rate SIPP relief. But the LISA has some important differences:

  • LISA at 60 is completely tax-free — unlike a SIPP where only 25% is tax-free and the rest is taxed as income
  • SIPP accessible from 57, LISA from 60 — the SIPP gives 3 years earlier access
  • SIPP annual allowance is much higher — up to £60,000/year vs £4,000 LISA
  • Higher rate taxpayers benefit more from the SIPP — SIPP gives 40–45% relief vs LISA's flat 25%

The practical conclusion for most UK FIRE investors: use both. Max the LISA (£4,000/year, £1,000 bonus) and then use the SIPP or ISA for larger contributions.

The LISA Withdrawal Penalty — Proceed With Caution

The LISA withdrawal penalty (25% of the withdrawn amount) is more punishing than most people realise. It does not simply remove the bonus — it takes more than the bonus. If you contribute £4,000 and receive £1,000 bonus (total £5,000), then withdraw early, you pay 25% × £5,000 = £1,250. You receive £3,750 — £250 less than your original £4,000 contribution.

During the COVID-19 pandemic the penalty was temporarily reduced to 20%, but it has since returned to 25%. Only open a LISA if you are confident the money will be used for a first home purchase or held until age 60.

Frequently Asked Questions

What is a Lifetime ISA?

A UK government savings account for 18–39 year olds. You contribute up to £4,000/year and receive a 25% government bonus (max £1,000/year). Funds can be used for a first home or retirement from age 60.

Can I use a LISA for FIRE retirement?

Yes, but only from age 60. The SIPP is accessible from 57. For very early retirees (before 57), neither is useful until they mature — the ISA is the primary vehicle for pre-57 retirement income.

What is the LISA penalty?

25% of the withdrawal amount. This is applied to the full fund value including the government bonus, so it actually removes more than the bonus. It effectively costs you money to withdraw early.

Stocks and Shares LISA or Cash LISA?

For long-term retirement savings, a Stocks and Shares LISA invested in global index funds almost always outperforms a Cash LISA over 20+ year horizons. Providers include AJ Bell, Moneybox, and Hargreaves Lansdown.

This calculator is for illustrative purposes only and does not constitute financial advice. LISA rules, bonuses, and penalties can change. Investment returns are not guaranteed. The LISA is a complex product and the withdrawal penalty can result in losing some of your own contributions. For advice specific to your circumstances, consult a qualified financial adviser.

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