When it comes to saving for a major milestone, such as buying one’s first home, some people may opt to save in an ISA. Lifetime ISAs and Help to Buy ISAs are different types of ISAs, however they bear a similarity in that they both offer a 25 per cent bonus from the government. That said, the rules on eligibility and application of the bonus will differ. There are limits as to how much a person can save into an ISA each year.

The maximum a person can save in ISAs in 2019 to 2020 is £20,000.

There are four types of ISA, with these being cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs.

A saver can put money into one of each kind of ISA in each tax year.

Those who have a Lifetime ISA can put up to £4,000 per tax year into it, with the maximum government bonus being £1,000 per year.

Up to £200 can be put into a Help to Buy ISA per month. That said, in the first month, savers can put in an additional £1,000.

The maximum government bonus for a Help to Buy ISA is £3,000.

It is paid once it is certain the transaction for the eligible house is to go ahead.

The buyer’s solicitor or conveyancer will claim the bonus between exchange and completion.

The Help to Buy ISA website states that a person can save into both a Lifetime ISA and the Help to Buy ISA scheme, if they meet the eligibility criteria.

However, the saver is only able to use the bonus from one of the schemes in order to buy a house.

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A Lifetime ISA can be used to buy one’s first home, or withdrawn without charge if a person is aged 60 or older, or terminally ill with less than 12 months to live.

Otherwise, a 25 per cent charge is applied if the saver withdraws cash or assets from this account for any reason.

It can be used to buy one’s first home if it fulfils the following criteria:

  • The property costs £450,000 or less
  • The property is being bought at least 12 months after the Lifetime ISA is opened
  • The conveyancer or solicitor to act in the purchase – the ISA provider will pay the funds directly to them
  • The buyer is purchasing with a mortgage.

For a Help to Buy ISA, the rules on qualifying for a government bonus differ.

It must be in the UK, in addition to having a purchase price of up to £250,000 or up to £450,000 in London.

It must also be the only home a person will own, be where one intends to live, and be purchased with a mortgage.



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