What this calculator does
Takes annual contribution, starting balance, expected return, and years to the target event (first home purchase or retirement at 60). Returns the projected balance including all government bonuses received.
The formula
LISA allowance: £4,000/year Government bonus: 25% on contributions (max £1,000 bonus/year) Effective annual input: up to £5,000 (£4,000 + £1,000 bonus) Future value with annual effective contributions: A = P × (1 + r)^t + (C + bonus) × [(1 + r)^t − 1] / r Where bonus = min(C × 0.25, £1,000) Withdrawal penalty: 25% of the withdrawal amount This claws back the government bonus plus 6.25% of your own contributions. Penalty = withdrawal × 25% Penalty-free withdrawals: 1. First home purchase (property ≤ £450,000, must use a mortgage) 2. After age 60 for retirement 3. Terminal illness
Assumptions
- Annual contributions and bonuses are added at the start of each year and compound from that point.
- Constant return rate throughout the projection.
- No tax on growth or income within the LISA wrapper.
- The 25% government bonus is received on all contributions up to £4,000/year.
- Penalty-free withdrawal conditions are met at the target date (first home or retirement at 60).
Data sources
| Figure | Value used | Source | Last checked |
|---|---|---|---|
| LISA annual limit | £4,000 | HMRC — Lifetime ISA | May 2026 |
| Government bonus | 25% (max £1,000/yr) | HMRC — Lifetime ISA | May 2026 |
| Max property value (first home) | £450,000 | HMRC — Lifetime ISA | May 2026 |
| Withdrawal penalty | 25% of amount | HMRC — Lifetime ISA | May 2026 |
| Minimum age to open | 18 | HMRC — Lifetime ISA | May 2026 |
| Maximum age to open | 39 | HMRC — Lifetime ISA | May 2026 |
| Maximum age to contribute | 49 | HMRC — Lifetime ISA | May 2026 |
Limitations
- Does not model the property purchase process or conveyancing timelines.
- Does not compare the LISA to a pension — use the Pension vs ISA calculator for that comparison.
- The 25% withdrawal penalty means unauthorised withdrawals cost more than just losing the bonus — up to 6.25% of your own contributions are also lost.
- Does not model what happens if contributions exceed the £4,000 annual limit.
Worked example
Inputs: contribute £4,000/year for 5 years, 5% annual return, no starting balance.
Effective annual input = £4,000 + £1,000 bonus = £5,000 Year 1: £5,000 Year 2: £5,000 × 1.05 + £5,000 = £10,250 Year 3: £10,250 × 1.05 + £5,000 = £15,763 Year 4: £15,763 × 1.05 + £5,000 = £21,551 Year 5: £21,551 × 1.05 + £5,000 = £27,628 After 5 years: £27,628 Total contributed (own money): £20,000 Total bonuses received: £5,000 Growth: £2,628
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |