📚 This is a plain-English definitions guide. All figures and rules are drawn from gov.uk/lifetime-isa and gov.uk/help-to-buy-isa. This is not financial advice — see the disclaimer below.
Both schemes give first-time buyers a 25% government bonus on their savings. But they work very differently — and the Help to Buy ISA is now closed to new applicants. Here’s a plain-English breakdown of how they compare, so you know exactly which one applies to you.
Both schemes pay a 25% government bonus — but the amounts and mechanics are very different.
| Lifetime ISA (LISA) | Help to Buy ISA | |
|---|---|---|
| Bonus rate | 25% on contributions | 25% on savings |
| Annual contribution limit | £4,000/year | £2,400/year (£200/month max) |
| Maximum annual bonus | £1,000/year ✓ Higher | No annual bonus limit — paid at completion |
| Lifetime bonus cap | Up to £33,000 (18–50) | £3,000 maximum (on £12,000 saved) |
| When bonus is paid | Monthly into your account | At property completion via your solicitor |
| Bonus counts toward deposit? | Yes — already in your account | No — paid only at completion, not exchange |
For most first-time buyers, the LISA offers considerably more bonus money over time. The Help to Buy ISA caps out at a £3,000 lifetime bonus; the LISA can deliver £1,000 every single year. Someone saving for five years could collect £5,000 in LISA bonuses vs £3,000 at most from a Help to Buy ISA — and the LISA bonus is already sitting in your account working for you.
This is where the two schemes differ most sharply — especially now that Help to Buy ISA is closed.
| Lifetime ISA (LISA) | Help to Buy ISA | |
|---|---|---|
| Open to new applicants? | Yes ✓ Still open | No — closed 30 Nov 2019 |
| Age to open | 18–39 only | 16+ (when open) |
| Age to contribute | Up to age 50 | Until Nov 2029 (existing accounts only) |
| First-time buyer required? | Yes | Yes |
| Property price limit (England) | £450,000 ✓ Higher | £250,000 (£450,000 in London) (limits at scheme closure, Nov 2019) |
| Can both partners use the scheme? | Yes — both can use separate LISAs | Yes — both could use separate accounts |
| Can you hold both? | Yes — but you can only use one government bonus per property purchase | |
The property price limit is a critical difference for most of England. Outside London, Help to Buy ISA was capped at £250,000 — a limit that rules out most properties in many parts of the country today. The LISA’s £450,000 limit covers the vast majority of first-time buyer purchases.
If you already hold a Help to Buy ISA and are under 40, you can also open a LISA. However, you can only use one government bonus when you buy — you cannot stack both on the same purchase. The LISA offers a higher lifetime bonus and a higher property price limit; the Help to Buy ISA offers more flexibility on early withdrawal. Which suits your circumstances will depend on your individual situation — consider speaking to an independent financial adviser if unsure.
How each scheme handles withdrawals — both for property purchase and for other reasons — is very different.
| Lifetime ISA (LISA) | Help to Buy ISA | |
|---|---|---|
| How to use for property | Conveyancer requests funds directly from LISA provider | Solicitor applies for bonus via government portal at completion |
| 12-month holding rule | Yes — must hold 12 months before use | No minimum holding period |
| Early withdrawal penalty | 25% on total balance (can lose more than you saved) | None — withdraw savings anytime, just don’t get the bonus |
| Non-property withdrawals | Only penalty-free at age 60+ or terminal illness | Anytime — just lose the bonus entitlement |
| Flexibility ✓ HTB wins here | Low — money is locked in | High — withdraw savings at any time |
The LISA’s withdrawal penalty is its biggest downside. If your plans change — you inherit a property, you buy above the £450,000 limit, or you simply need the money — withdrawing early costs you 25% of the total balance. On a £20,000 LISA pot, that’s a £5,000 penalty, leaving you with £15,000 from £16,000 of your own money.
The Help to Buy ISA has no such penalty. You can withdraw your savings at any time; you simply don’t claim the government bonus. This flexibility made it more forgiving — but the lower property limit and smaller bonus made it less powerful for most buyers.
The bottom line: if you are under 40 and certain you are buying a first home under £450,000, open a LISA as soon as possible to start the 12-month clock. If you already have a Help to Buy ISA, check your property’s price against both limits before deciding which bonus to claim at completion.
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Subscribe free →Not financial advice. This guide compares the LISA and Help to Buy ISA based on HMRC rules as of April 2026. It is for information only and does not constitute personal financial advice. Individual circumstances vary — consider speaking to an independent financial adviser before making any savings decision. Always check gov.uk/lifetime-isa and gov.uk/help-to-buy-isa for the latest rules.