The Lifetime ISA and the Help to Buy ISA both offer a 25% government bonus for first-time buyers, but they differ in important ways. This guide compares the Lifetime ISA with the Help to Buy ISA: who can open each, the bonus and limits, the price caps, the penalties, and which suits different savers.

Two savings schemes with a bonus

Both the Lifetime ISA (LISA) and the Help to Buy ISA are government-backed savings accounts that add a 25% bonus to help first-time buyers, but they work differently and have different rules, as our guide to the Lifetime ISA explains. Understanding the differences helps savers choose the right one, or make the most of an existing account, as only one bonus can be used towards a single home purchase.

Who can open each

The key difference in availability is that the Help to Buy ISA closed to new applicants in November 2019, so you can no longer open one, while the Lifetime ISA remains open to new savers aged 18 to 39. So for anyone starting to save now, the Lifetime ISA is the option, whereas the Help to Buy ISA is only relevant to those who already hold one, as our guide to saving a deposit explains.

The bonus and contribution limits

The Lifetime ISA lets you pay in up to £4,000 a year for a £1,000 annual bonus. The Help to Buy ISA allowed smaller contributions, up to £200 a month (with a larger first deposit), so its bonus accrued more slowly, with a maximum bonus of £3,000 on £12,000 saved. So the LISA allows faster saving and a potentially larger total bonus, which is a significant advantage for those building a deposit.

The price caps

The price caps differ: a Lifetime ISA can be used for a first home worth up to £450,000 anywhere in the UK, while the Help to Buy ISA's limit was £250,000, or £450,000 in London. So the LISA's higher cap outside London makes it more useful for buyers of higher-priced homes outside the capital. Checking that your intended home falls within the relevant cap is important whichever account you use.

When the bonus is paid

A practical difference is timing: the Lifetime ISA bonus can be used towards your deposit at exchange of contracts, whereas the Help to Buy ISA bonus is paid only on completion, so it cannot form part of the deposit you put down at exchange. This makes the LISA more useful for the deposit itself. For buyers needing the bonus as part of their deposit, this timing difference matters.

Penalties and withdrawals

The Lifetime ISA charges a 25% penalty on withdrawals not used for a qualifying first home or retirement, which can leave you with less than you paid in, while the Help to Buy ISA has no such penalty, though you only get the bonus if you use it to buy. So a LISA ties your money up more firmly. This difference matters if there is a chance you will need the money for other purposes.

Which suits which saver

For new savers, the Lifetime ISA is the only option and generally the stronger one, with a higher contribution limit, higher cap outside London, and a deposit-stage bonus. Existing Help to Buy ISA holders can keep saving into theirs until November 2029 and claim the bonus by the deadline, or consider transferring to a LISA. Comparing the two, including any transfer rules, helps existing holders decide the best route.

Can you have both?

You can hold both a Lifetime ISA and a Help to Buy ISA if you opened the Help to Buy ISA before it closed, but you cannot use the government bonus from both towards the same property purchase, you must choose which bonus to use. So while you can save in both, only one bonus counts for buying a home. Understanding this rule helps existing holders of both decide how to use their accounts.

Transferring a Help to Buy ISA to a LISA

You can transfer a Help to Buy ISA into a Lifetime ISA, though the transferred amount counts towards the LISA's annual contribution limit, and you receive the LISA bonus rather than the Help to Buy bonus on those funds. This can suit those wanting the LISA's higher limits and deposit-stage bonus. Weighing the benefits of transferring against keeping the Help to Buy ISA depends on your circumstances and timescale.

An example comparison

Suppose you can save £4,000 a year. In a Lifetime ISA, that earns a £1,000 bonus annually. In a Help to Buy ISA, the £200 monthly limit caps contributions at £2,400 a year (after the first month), so the bonus accrues more slowly. Over several years, the LISA's higher limit can produce a larger total bonus, which is a key reason it often suits savers building a deposit faster.

The retirement angle

The Lifetime ISA can also be used for retirement from age 60, so unused first-home savings are not lost, whereas the Help to Buy ISA is purely for a first home (though you keep your savings if you do not buy). This dual purpose gives the LISA extra flexibility. For savers who value a fallback use for the money, the LISA's retirement option is an additional point in its favour.

For existing Help to Buy ISA holders

If you already hold a Help to Buy ISA, you can keep saving into it until November 2029 and must claim the bonus by the deadline that follows, as our guide to saving a deposit relates. You can continue with it, or consider transferring to a LISA for the higher limits, weighing the timing and your plans. Existing holders have a real choice, so it is worth comparing the two carefully.

Check the current rules

The rules, limits, price caps and deadlines for both accounts can change, so it is important to confirm the current details before relying on either, particularly the Help to Buy ISA deadlines and the LISA price cap, as our guide to the Lifetime ISA explains. Checking the latest position ensures you use whichever account suits you within the current rules, and claim any bonus correctly and on time.

The bottom line

For new savers, the Lifetime ISA is the clear choice, since the Help to Buy ISA is closed, and it offers higher contributions, a higher cap outside London and a deposit-stage bonus, in exchange for tighter withdrawal rules. Existing Help to Buy ISA holders can continue saving or consider transferring, weighing the deadlines and their plans. Either way, the 25% bonus is valuable, so using the right account well can meaningfully boost a first-home deposit.

In short

Both the Lifetime ISA and Help to Buy ISA give a 25% first-home bonus, but the Help to Buy ISA closed to new savers in 2019, while the LISA is open to those aged 18 to 39. The LISA allows more saving (£4,000 a year), a higher price cap outside London (£450,000), and a bonus usable at exchange, but penalises non-qualifying withdrawals. Existing Help to Buy ISA holders can save until November 2029.

Where to get help and next steps

Read our guides to the Lifetime ISA, saving a deposit, and Help to Buy. This is general information, not financial advice; scheme rules change, so check current details.