A lifetime ISA (also known as the LISA) is a long term Independent Savings Account (ISA) introduced in 2016. A lifetime ISA offers all the attractive tax benefits of a standard ISA, but with the additional bonus of a 25% boost provided by the government. The LISA was introduced to help first-time buyers and those looking to save for retirement.
In this article, we take a look at the providers currently offering a Lifetime ISA and compare the best and cheapest stocks and shares and cash Lifetime ISA's.
We recommend you read the full article but for those looking for a quick summary, our top 3 picks are below.
Best Lifetime ISAs - Our top 3 picks
|Lifetime ISA Type||Provider||Good for||Cost||Min Investment||More Info|
|Stocks & Shares Lifetime ISA||Nutmeg||Passive investors - Those who are happy for someone else to manage investment decisions||0.75%||£100||Nutmeg|
|Cash and Stocks & Shares Lifetime ISA||Hargreaves Lansdown||Flexibility & Low initial investment - Can hold money in cash or invest in Stocks & Shares||0.25%||£25 per month/ £100 lump sum||Hargreaves Lansdown*|
|Cash Lifetime ISA||Moneybox||Low Cost||£0.00||£1||Moneybox|
Click the headings below to jump to the following sections of the article:
- Stocks & Shares Lifetime ISA comparison table
- Top Cash Lifetime ISA comparison table
- Cheapest Lifetime ISA
- Best Lifetime ISA
List of Lifetime ISA providers
Below I have listed a range of Lifetime ISA providers including Stocks & Shares Lifetime ISAs and Cash Lifetime ISAs. I have also created comparison tables to compare the charges between the providers of the Stocks & Shares LISAs and the Cash LISAs.
AJ Bell* offers a Stocks & Shares Lifetime ISA that allows deals in funds from £1.50 per deal and shares from £9.95 per deal. It offers an easy to manage account accessible 24/7 through the app or online with the ability to ask for help from its investment experts. AJ Bell does however charge an annual fee of 0.25%. There is a high minimum investment of £500 if paid by a lump sum, or alternatively, a direct debit can be set up for £25 a month.
If you choose to invest in a cash only LISA with AJ Bell you can earn up to 0.15% interest.
Beehive Money offers a cash Lifetime ISA with a rate of 2.75%. Users will need to download the app to open and manage their Lifetime ISA.
EQi, formerly known as Selftrade, offers a Stocks & Shares Lifetime ISA and allows you to invest in a restricted range of funds which have been selected by Square Mile. Its annual charge for holding your investments is 0.20% (capped at £10 per quarter) making it one of the cheapest in the market but it does charge you £10.99 when you make a fund switch (a sale). Its investment choice is more limited than other Stocks and Shares Lifetime ISA providers and its website is tricky to navigate.
Foresters Friendly Society
Foresters Friendly Society offers a Stocks & Shares Lifetime ISA that is run by its fund managers manage, with the aim of steady investment growth over a medium-long term; so you may want to consider this if you are planning to purchase a home within the next 5 years and especially after the 12-month limit. It has a minimum investment of £500 (or £50 per month) and top ups can be made in sums of £250 or more. Foresters Friendly Society charges an annual fee of 2% of the value of your LISA.
Hargreaves Lansdown* charges 0.25% for holding DIY investments in a Lifetime ISA up to £1m. The charge reduces to 0.10% for between £1m and £2m and there is no charge for fund values over £2m. There are additional charges for dealing in ETFs, investment trusts (but not unit trusts) and shares on top of this. Hargreaves Lansdown allows you to invest in both shares in the UK and Internationally or invest in over 2,500 funds. However, if stocks and shares investing isn't for you, Hargreaves Lansdown does allow you to hold cash (effectively making it a Lifetime Cash ISA) however you will not earn any interest. This may be a good flexible option for those that plan to invest in stocks and shares in the future, but do not want to have to switch providers. Hargreaves Lansdown has a minimum initial investment of £100 or £25 per month.
Hargreaves Lansdown also provide a handy Lifetime ISA guide and calculator which will work out your potential bonus for you.
Moneybox charges a £1 monthly fee for its Stocks & Shares Lifetime ISA (free for the first 3 months). Moneybox also charges an additional platform fee of 0.45% as well as provider costs of between 0.12% and 0.58%. The fund provider fees are incorporated within the daily fund valuation, so you will not see this charge leave your account. You can invest from as little as £1 and can invest by topping up your purchases via the Moneybox app.
You can also open a Moneybox Lifetime Cash ISA and it offers a rate of 3.50% (which includes a fixed one-year bonus interest rate of 2.75%). There are no monthly fees and you can invest from as little as £1 via the Moneybox app.
Newcastle Building Society
Newcastle Building Society offers a Cash Lifetime ISA which you can manage online, by post or on the telephone. You can open an account for as little as £1 and it offers an interest rate of 2.50%.
Nutmeg is a robo-adviser that offers four types of investing portfolios; fully managed, fixed allocation, smart alpha and socially responsible. The fully managed, smart alpha and socially responsible portfolios are charged at 0.75% and fixed allocation portfolios are charged at 0.45%. These reduce to 0.35% and 0.25% respectively on investment values over £100k. To invest, Nutmeg requires a minimum of £100 to open an account.
OneFamily offers two simple 'climate friendly' funds to invest in as they want to make 'investing in your future as simple as possible.' OneFamily has designed a short (5 year) lower risk level fund and a longer (10 year) higher risk level fund similar to that of Foresters Family Friendly. It allows you to switch funds at any time free of charge but they charge an annual account fee of 1.10%, which does not include the 0.30% fund expenses charge. OneFamily has a minimum investment of £250 or regular investment of £25 per month. Similar to Foresters Family Friendly it is worth considering the purpose of your Lifetime ISA before opening with OneFamily as its LISA is designed for the long term so would be better suited to retirement, unless you were looking to buy a property in 5 years time.
Paragon bank launched a cash Lifetime ISA in November 2019 and offers a variable interest rate of 2.50%. Accounts can be opened from just £1 and must be completed online. Once opened, the account can be managed online, by post or telephone. Paragon bank allows you to transfer from other Lifetime ISAs, and there are no additional account fees.
Skipton Building Society
Skipton Building Society offers an interest rate of 2.25% that can be earned daily but is not paid until the anniversary of the account opening date. They advise that due to interest rates being variable they will notify you if the interest rate is due to drop and you have less than £100 in your account. Skipton Building Society allows a Lifetime Savings Account to be opened with just £1.
Below is a comparison table of the charges for a Stocks & Shares Lifetime ISA and a Cash Lifetime ISA.
Stocks & Shares Lifetime ISA comparison table
|Stocks & Shares LISA Provider||Minimum payment||Annual Charge|
|AJ Bell*||£500 / £25 per month||0.25%|
|Forester||£500 / £50 per month||2% of fund value|
|Hargreaves Lansdown*||£100 / £25 per month||0.25% on funds up to £1m
0.10% on funds between £1m and £2m
0.00% on funds over £2m
|Nutmeg||£100||0.75% fully managed (reduces to 0.35% for investments over £100k)
0.45% fixed allocation (reduces to 0.25% for investments over £100k)
plus there is an underlying investment fund and market spread fee of 0.19% + 0.06% for fully managed and 0.17% + 0.06% for fixed allocation
|OneFamily||£25 per month / £250 lump sum||1.10% annual management charge
0.30% investment expenses charge
|Moneybox||£1||£1 monthly charge (first 3 months free)
0.45% platform fee
Fund provider fees cost 0.12%-0.58%
Top Cash Lifetime ISA comparison table
|Cash LISA Provider||Minimum payment||Up to £10k||£10k - £50k||Above £50k|
|The Newcastle Building Society||£1||2.50%||2.50%||2.50%|
|Skipton Building Society||£1||2.25%||2.25%||2.25%|
*Moneybox rate is 3.50% base rate (variable) plus a fixed one-year bonus interest rate of 2.75%. This means that the rate of 3.50% is only guaranteed for the first year
Cheapest Lifetime ISA
At present, the choice is between twelve Lifetime ISA providers, a huge increase when you consider there were only two just a few years ago. If you want to manage your own investments and are looking for the cheapest Lifetime ISA then Hargreaves Lansdown* has an annual management charge of just 0.25%. It offers a huge range of investment funds to choose from and has a minimum investment of £100 or £25 monthly to get started. Therefore, Hargreaves Lansdown could be a good option for investors with a smaller sum of money who still want a wide investment choice. Alternatively, AJ Bell charges the same fee for a Lifetime ISA, however, it does have a high initial investment cost of £500 lump sum or £25 monthly. Another alternative is EQi which offers a Lifetime ISA with no minimum investment and an annual charge of 0.25% but the investment choice is much more restricted.
By contrast, Nutmeg offers a fully managed service where they run a portfolio for you with an annual charge of 0.75%. A cheaper alternative is to choose a fixed allocation portfolio with a fee of 0.45%. With both options there are additional underlying investment fund and market spread fees as shown in the table above. For further information on Nutmeg and whether they are the right investment for you, read our Nutmeg Review.
Best Lifetime ISA
At present, the best value for money when it comes to charges and investment options for a stocks and shares LISA is the Hargreaves Lansdown Lifetime ISA* or if you want someone to manage your LISA for you then the Nutmeg Lifetime ISA (fully managed option) is the best value.
The best cash Lifetime ISA boils down to the provider with the best interest rate. At present, Moneybox offers the top interest rate of 3.50% and you can start with a minimum investment of £10. Bare in mind, however, that the Moneybox LISA reduces to 0.75% after 1 year. Beehive Money, with a minimum investment of £1, is next with an interest rate of 2.75%.
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