UK Help to Buy Alternatives 2026 — Lifetime ISA and What Replaced It
Introduction
Correction notice (updated 30 July 2026). Earlier versions of this page said the Help to Buy ISA "closed 2023" and described the Lifetime ISA bonus as 4% per year. Both are wrong. The Help to Buy ISA closed to new accounts on 30 November 2019, and the Lifetime ISA bonus is 25%, not 4%. If you already hold a Help to Buy ISA it is still live — see the dates below before assuming you have lost it.
Key Concepts
If you already have a Help to Buy ISA — it did not disappear. You can still pay in up to £200 a month until November 2029, and claim the 25% government bonus (up to £3,000) until November 2030. The property must cost up to £250,000, or £450,000 in London. You cannot open a new one.
Lifetime ISA — open one between 18 and 39, pay in up to £4,000 a year until you turn 50, and the government adds 25%, up to £1,000 a year. The property must cost £450,000 or less and you must buy at least 12 months after your first payment. The £4,000 counts inside your overall £20,000 ISA allowance.
You can only use the government bonus from one of them if you hold both. You can transfer a Help to Buy ISA into a Lifetime ISA; transferring the other way triggers the 25% withdrawal charge.
Ordinary Cash or Stocks & Shares ISA — no bonus, but no tax on the interest or growth, no CGT on gains at any size, and no restriction on what you spend it on.
Worked example — the LISA bonus in practice
A 28-year-old saver pays the maximum £4,000 into a Lifetime ISA every year for four years, aged towards a first home costing under £450,000, then buys and withdraws the funds.
- Bonus per year: £4,000 × 25% = £1,000
- Total contributed over 4 years: £4,000 × 4 = £16,000
- Total government bonus over 4 years: £1,000 × 4 = £4,000
- Total in the LISA before any investment growth: £16,000 + £4,000 = £20,000
Because the withdrawal is for a qualifying first-home purchase, none of the 25% government withdrawal charge applies — the saver keeps the full bonus. Had they instead withdrawn early for an unrelated reason, the 25% charge on the total withdrawn amount (not just the bonus) would have clawed back more than the bonus itself, leaving them with less than they actually paid in.
Why the withdrawal charge is worse than "losing the bonus"
The 25% charge applies to the whole withdrawal, not only to the bonus portion. On a withdrawal of £5,000 that includes a £1,000 bonus, a 25% charge is £1,250 — more than the £1,000 bonus itself, meaning a non-qualifying early withdrawal can leave you with less than you originally paid in, not merely "no better off."
FAQ
Q: Can I have both a Help to Buy ISA and a Lifetime ISA at the same time? A: Yes, but you can only use the government bonus from one of them towards a single property purchase — holding both does not double the bonus available for one purchase.
Q: If I already have a Help to Buy ISA, should I switch to a LISA? A: A Help to Buy ISA remains payable into until November 2029 and bonus-claimable until November 2030, with lower property price caps (£250,000, or £450,000 in London) than a LISA's flat £450,000 — whether switching makes sense depends on your specific property budget, timeline, and how much you've already saved, not a single universal answer.
Q: Does the Lifetime ISA £4,000 come on top of my normal £20,000 ISA allowance? A: No — the £4,000 LISA contribution counts inside the overall £20,000 ISA allowance, not in addition to it.
Sources
Figures verified against HMRC/gov.uk guidance as of 30 July 2026:
- gov.uk — Help to Buy ISA (closed to new accounts 30 November 2019; existing accounts payable until November 2029, bonus claimable until November 2030; £250,000/£450,000 London property caps)
- gov.uk — Lifetime ISA (£4,000 annual limit within the overall £20,000 ISA allowance; 25% government bonus up to £1,000/year; under-40 opening age; £450,000 property cap; 25% charge on the whole withdrawal amount for non-qualifying withdrawals)