Help to Save or Lifetime ISA: Government Bonuses Compared

Help to Save and the Lifetime ISA both add government money to what you put aside, but they are aimed at different people and different goals. Help to Save is a savings account for people on certain benefits, and it pays 50p for every £1 saved over four years¹. The Lifetime ISA is open to anyone aged 18 to 39, pays a 25% bonus on contributions, and is designed for a first home or retirement².

The two are not rivals in the way a comparison table suggests. You can hold both, and holding one does not affect the other. What usually decides the question is eligibility: Help to Save is restricted to people receiving Universal Credit or Working Tax Credit, while the Lifetime ISA is open to a much wider group but caps what you can pay in at £4,000 a year⁴.

There is a third account in the background for many readers. The Help to Buy ISA closed to new savers on 30 November 2019, but existing holders can keep paying in until 30 November 2029 and must claim the bonus by 1 December 2030⁶. If you hold one of those, the rules on using it alongside a Lifetime ISA matter.

Help to Save and the Lifetime ISA: what each one is for

Help to Save is a government savings scheme for people who receive Universal Credit⁷. It is a straightforward account: you pay in what you can, and the government adds a bonus of 50p for every £1 you save over four years¹. It is not an ISA and it is not designed around a specific purchase. It is aimed at building a cash cushion for people on lower incomes.

The Lifetime ISA is different in kind. It is a type of ISA, and the government describes it as designed to encourage saving for two significant life events: buying a first home and retirement⁸. It was launched in April 2017, and people aged 18 to 40 could open one from that point⁹. The bonus is 25% on contributions, and the account can hold cash or investments, with the same qualifying investments as a cash or stocks and shares ISA¹¹.

The two schemes came from the same piece of legislation. The Savings (Government Contributions) Bill was introduced to create both the Lifetime ISA and Help to Save¹². But they have diverged since. The Lifetime ISA is being reviewed: the government has said it will consult on a new, first-time-buyer-only product that would provide the bonus when a person uses it to buy a house, removing the need for a withdrawal charge¹³. Until that product exists, the Lifetime ISA remains open and account holders can keep saving into it under the existing rules¹³.

Who can open Help to Save and who can open a Lifetime ISA

The eligibility rules are where the two schemes separate most sharply.

For Help to Save, you need to be receiving certain benefits. Since 6 April 2025, working individuals receiving Universal Credit who earn £1 or more in their assessment period have been able to open an account⁴. People entitled to Working Tax Credit are also eligible¹. The scheme has been widened once already and is due to widen again.

For a Lifetime ISA, you must be 18 or over but under 40 to open one². You can keep contributing and receiving the bonus from age 18 up to age 50¹⁴. You can open more than one Lifetime ISA during your life, but you can only contribute to one in each tax year¹¹.

One point that catches people out: retirement savings held in a Lifetime ISA are included in the Universal Credit eligibility assessment, which the government has described as inconsistent with all other pension savings¹⁵. If you are on Universal Credit and hold a Lifetime ISA, the money in it can affect what you receive.

Help to Save is widening to more Universal Credit claimants

The Help to Save scheme has been expanded in stages. The most recent change, in force from 6 April 2025, opened it to all working individuals in receipt of Universal Credit who earn £1 or more⁴. Before that, the earnings test was tighter.

The next stage is larger. From 6 April 2028, eligibility will be extended to all Universal Credit claimants who receive the child or caring element⁶. That means parents and carers who are not in work will be able to open an account, not just those with earnings. The government has described this as expanding the scheme to all households receiving the child or carer's element of Universal Credit¹⁷.

The scheme's history explains the shape of it. Help to Save grew out of an earlier idea called the Saving Gateway, which had a household income limit of £16,040. Help to Save was designed around Universal Credit instead, and because it is open to anyone on Universal Credit, individuals on earnings of up to £30,000 can also benefit¹⁸. That is a wider reach than the scheme it replaced.

For readers in Scotland, Wales and Northern Ireland, the benefit rules that decide Help to Save eligibility are the same across the UK, because Universal Credit and Working Tax Credit are reserved matters. The devolved administrations run separate cost-of-living support, and Scotland's cost of living site and the Northern Ireland guidance on Universal Credit and health conditions are useful starting points if you are checking what else you can claim¹⁹.

Government bonuses compared: how much you put in and what is added

The headline rates look similar, but the mechanics differ.

Help to Save pays 50p for every £1 saved over four years¹. That is the more generous rate per pound, which is why it is restricted to people on certain benefits.

The Lifetime ISA pays 25% on contributions, up to a maximum of £1,000 a year². The £1,000 cap follows from the £4,000 annual limit: 25% of £4,000 is £1,000⁵. Over a lifetime, the maximum bonus is £32,000¹¹. The bonus is paid annually, and it stops when you reach 50¹⁴.

The Lifetime ISA bonus is equivalent to tax relief at the basic rate. That matters if you are comparing it with a pension. Higher and additional rate taxpayers lose out on higher tax relief when choosing to save in a Lifetime ISA rather than a pension, because the bonus is pitched at the basic rate¹⁵. There is also a warning that applies to anyone weighing a Lifetime ISA against a workplace pension: if you save in a Lifetime ISA instead of enrolling in or contributing to a qualifying scheme, occupational pension scheme or personal pension scheme, you may lose the benefit of employer contributions, and your entitlement to means-tested benefits may be affected²¹.

Help to Buy ISA or Lifetime ISA: limits, bonus and when you get the money

The Help to Buy ISA is closed to new savers, but it still matters to people who hold one. It was available from 1 December 2015, and each first-time buyer could only open one during the lifetime of the scheme¹¹. The scheme closed to new accounts on 30 November 2019⁶.

For those who hold one, the bonus works differently from a Lifetime ISA. The Help to Buy ISA bonus applies to both the amount saved and the interest built up while the account is open¹⁴. There is no time limit on when the bonus can be used, once the account is open¹⁴. The bonus is claimed when you buy, not paid annually.

The Lifetime ISA pays its bonus annually, and the money can be used for a first home or kept until retirement. You can take your savings out of a Lifetime ISA when you are 60 or over². For a home purchase, the property must cost £450,000 or less, you must be buying with a mortgage, and you must be a first-time buyer². There is an initial minimum holding period of 12 months from account opening before withdrawals that include the government bonus can be made for a home purchase¹¹.

If you are buying with someone else who also has a Lifetime ISA, you can both use your savings and government bonus, provided you both meet the first-time buyer conditions². Each first-time buyer can use a Lifetime ISA and each benefit from their own government bonus¹¹.

You can hold a Lifetime ISA alongside a Help to Buy ISA

Holding both is allowed. Savers can save into both a Help to Buy ISA and a Lifetime ISA, but can only use the government bonus from one of the two to buy a first home¹¹. The restriction is on the bonus, not on the accounts.

Transfers between the two have their own rules. You can transfer money from a Help to Buy ISA to a Lifetime ISA. If you transfer money from a Lifetime ISA to a Help to Buy ISA, you will have to pay the 25% withdrawal charge². That charge is the penalty for taking money out of a Lifetime ISA for something other than a first home or retirement.

There was a one-off window in 2017-18 when funds built up in a Help to Buy ISA before 6 April 2017 could be transferred to a Lifetime ISA without counting towards the £4,000 Lifetime ISA limit, with a 25% government bonus on the full value transferred¹¹. That window has closed. Contributions made on or after 6 April 2017 can still be transferred, but they count against the Lifetime ISA contribution limit for the year of transfer¹¹.

The Financial Ombudsman Service has published a case study about a customer who transferred an existing Help to Buy ISA into a Lifetime ISA and was told they would receive the government bonus on the full amount transferred²². It is a reminder that the transfer rules are specific and worth checking before moving money.

Help to Buy ISA deadlines for saving and claiming the bonus

The Help to Buy ISA has two dates that matter, and they are about a year apart.

Saving into an existing Help to Buy ISA ends on 30 November 2029⁶. After that date, no further money can be paid in. The account does not have to be closed, but it stops growing through new contributions.

The government bonus must be claimed by 1 December 2030⁶. That is the final date. If you buy a home after that date, or fail to claim before it, the bonus is lost.

The bonus can be used towards a first home in a number of ways. In Scotland, the amount saved plus any bonus from a Help to Buy ISA or Lifetime ISA can be used for a purchase under the Help to Buy (Scotland) Affordable New Build Scheme, but only the government bonus from one ISA can be used to buy a first home²³. The First Homes Fund in Scotland also accepts a Help to Buy ISA or Lifetime ISA towards a deposit²⁴. In Wales, the Help to Buy Wales shared equity loan scheme operates separately, and the quality report on it sets out how it works²⁵.

If you are unsure whether a scheme accepts your ISA, the conveyancer handling the purchase will ask you to sign a declaration confirming the funds will only be used towards the purchase price of your first residential property, or your first share in a residential property²⁶.

Where to get help

If you are on a low income and trying to work out whether Help to Save or a Lifetime ISA suits you, free and impartial help is available. MoneyHelper, the government's money guidance service, covers both schemes. Turn2us has a plain-English guide to who can use Help to Save and how to apply⁷. Business Debtline and Scotland's cost of living site both cover saving and borrowing on a low income²⁸.

If something goes wrong with a Lifetime ISA, for example a withdrawal charge you were not expecting, the Financial Ombudsman Service can look at complaints about how a firm handled it²². The FCA's rules on Lifetime ISAs set out what firms must tell you about the risks, including the warning about employer contributions if you save in a Lifetime ISA instead of a pension²¹.

For the wider picture on savings accounts, including how interest is taxed and how protection works, the savings guide covers the basics. If you are weighing up a Lifetime ISA against a pension, the pensions guide explains how workplace contributions and tax relief work. And if you are on Universal Credit and want to know how savings affect your payments, the guide to how savings affect benefits sets out the rules.