Can You Have a LISA and an ISA?

You can have a LISA and another ISA, but the total allowance remains £20,000 per year. Learn how LISAs affect other ISAs and withdrawal rules.

A Lifetime ISA (LISA) is a tax-free savings account designed for first-time homebuyers and retirement savings, offering a 25% government bonus on contributions. Many people wonder whether they can hold both a LISA and another type of ISA in the same tax year. The short answer is yes, but there are important rules regarding ISA allowances and contribution limits.

This guide explains how much you can save, how a LISA affects other ISAs, withdrawal rules, and whether you can open a LISA if you already have an ISA.

How Much Can You Save?

The ISA allowance for 2024/25 is £20,000 per year, which can be split between different types of ISAs.

If you open both a Lifetime ISA and another ISA, the total amount you can contribute cannot exceed £20,000 in a single tax year.

For example, if you contribute £4,000 into a LISA (the maximum allowed), you have £16,000 left to save in other ISAs, such as a Cash ISA or Stocks & Shares ISA.

What Does the Lifetime ISA Mean for Other ISAs?

A LISA counts toward your total ISA allowance, so it reduces how much you can contribute to other ISAs. However, you can still hold and pay into different types of ISAs in the same tax year.

You can have:

  • A Lifetime ISA (£4,000 max per year)

  • A Cash ISA

  • A Stocks & Shares ISA

  • An Innovative Finance ISA

As long as your total contributions do not exceed £20,000, you can spread your savings across multiple ISAs.

When Can You Withdraw Your Money?

Each ISA has different withdrawal rules.

  • Cash ISAs allow free withdrawals anytime (unless it's a fixed-rate ISA).

  • Stocks & Shares ISAs let you sell investments and withdraw cash at any time, but market conditions may affect returns.

  • Lifetime ISAs have strict withdrawal rules. You can withdraw:

    • Tax-free to buy a first home (property must cost £450,000 or less).

    • After age 60 for retirement savings.

    • With a 25% penalty if withdrawn for other reasons.

The LISA withdrawal penalty means you may get back less than you put in, so consider your savings goals before committing funds.

Can I Open a Lifetime ISA if I Already Have an ISA?

Yes, you can open a LISA and another ISA in the same tax year. However, you must follow these limits:

  • The LISA contribution cap is £4,000 per year.

  • The total ISA allowance remains £20,000, so if you put £4,000 in a LISA, you have £16,000 left for other ISAs.

  • You can only open and pay into one of each type of ISA per tax year.

Final Thoughts

You can have both a Lifetime ISA and another type of ISA, but the total contributions cannot exceed £20,000 per year. The LISA is best suited for first-time homebuyers and retirement savers, while Cash and Stocks & Shares ISAs offer more flexibility.

If you are saving for a home or retirement, a LISA is a great tax-efficient option, but consider the withdrawal restrictions before committing funds.

To compare ISA providers and find the best rates, visit GOV.UK.