Lifetime ISAs for over 40s

If you’re over 40 and have a LISA with another provider, you can still transfer it to us. And although you need to be aged 18-39 when you first open a Lifetime ISA, you can keep paying in and receiving a government bonus until you turn 50. Find out more in this guide about how Lifetime ISAs for over 40s work.

Can I open a Lifetime ISA after 40?

If you’re already an AJ Bell customer (with any type of account), you can open a Lifetime ISA over 40 if you’re going to transfer in a LISA you hold elsewhere. Once that transfer is complete, you’ll be able to pay into your new Lifetime ISA until you turn 50. And as usual, we’ll claim your 25% bonus for you on what you pay in. Just remember the usual annual LISA limit of £4,000 per year will apply.

If you've already turned 40 and haven't already opened a Lifetime ISA elsewhere, or you don’t already hold another account type with us, it isn't possible to open and pay into a new Lifetime ISA account with AJ Bell.

How does a Lifetime ISA for over 40s work?

Existing AJ Bell customers can transfer an existing Lifetime ISA to us in just three easy steps:

Apply for an AJ Bell Lifetime ISA. During your application, you can start transferring your existing LISA to us, or do it later.

Let us know the details of your existing LISA, and whether you want to transfer it as investments or as cash.

Once the transfer is complete, you can start to pay in up to £4,000* each year and get your 25% government bonus.

*What you pay into your LISA also counts towards your overall ISA allowance of £20,000 per year.

Who might use a Lifetime ISA?

Though a Lifetime ISA is mainly used to help people buy their first home (rules apply), it's also a tax-efficient way of topping up your retirement savings. That's because you can withdraw money from it at age 60 or over, completely penalty and tax free.

But bear in mind the account isn't for everyone. If you take money out of it before age 60 - other than for a qualifying first-time house purchase - then you’ll face a 25% government withdrawal charge, meaning you could get back less than you paid in.

Using a pension vs a LISA for retirement

There are no plans to let employers pay into Lifetime ISAs instead of workplace pensions. So, if you’re employed, you shouldn't opt out of your workplace pension to pay into a Lifetime ISA instead, as you’ll miss out on what your employer would pay in for you.

The main advantages of using your LISA for retirement savings are if you’re self-employed, or you’re employed but have already maxed out your pension savings allowances.

But the balance generally swings back to a pension if you’re a higher rate taxpayer. You’ll be able to claim extra tax relief on the money you pay into a pension compared to the Lifetime ISA bonus.

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