Lifetime ISA showdown 2025: which bank pays the biggest bonus?

Saving for a house deposit? Yeah, we know, it feels impossible. You’ve somehow got to scrape together tens of thousands of pounds for a deposit while contending with:

• HMRC taxing your very existence
• Rent eating up half your paycheck
• Student loans taking another chunk after you graduate

However, there is some good news to get lukewarm excited about: the Lifetime ISA (LISA).

It’s one of the rare times the government gives you something for nothing. Put up to £4,000 a year into your LISA and they add 25% on top. That’s an extra £1,000 just for setting aside money you were going to save anyway.

But not all LISAs are created equal. Some banks are paying seriously competitive interest rates on top of that government bonus.

So, which LISA from which provider should you pick?

Quick refresher: how does a Lifetime ISA work?

Never heard of a LISA before? Here are the key details:

• Who can get one? Anyone aged 18–39. Open it before you hit 40 and you can keep paying in until you're 50.
• How much can you save? Up to £4,000 every tax year.
• The magic bit: The government adds 25% to whatever you put in. Max out your £4k in a year? You get an extra £1k.
• What can you use it for? As a deposit on the first home you buy with a mortgage (maximum property value of £450k). Or you can use it as retirement savings and access it from the age of 60.
• Are there penalties? Oh, yes. Big time. Take any money out early for any reason and get slapped with a 25% charge on your entire pot. For example, if you save £1,000, get your £250 bonus (total £1,250). If you cash out early, you pay £312.50 in charges and walk away with just £937.50 so that’s less than you put in. Ouch.

The top 5 Cash Lifetime ISAs in 2025

We’ve scoured the market and picked out these top five accounts. “Rate” means the level of interest they pay on the total value of your savings pot.

1. Moneybox: highest first-year rate

• Rate: 4.69% AER (variable)
• Facts: You can open your Moneybox account with just £1 and manage everything in the app. You also have the peace of mind knowing your cash sits with FSCS-protected partner banks (money's safe up to £85k)
• Why it's strong: Its first-year return is generous. The 4.69% rate, combined with the 25% government bonus, will grow your pot faster. We also liked the app (very easy to use) and how straightforward the process of transferring any existing LISAs to Moneybox was.
• Buyer beware: After year one, your rate drops 3.05%. That's still pretty decent, but it's now far from the highest.
• Best for: First-time buyers who want to squeeze every penny out of year one.

Plum: massive rate, super simple

• Rate: 4.65% AER (variable)
• Facts: Breathing down Moneybox's neck is Plum, whose rate is an impressive 4.65% You can open your account with as little as 1p (yeah, seriously). The app is super-smart and comes with a great range of easy-to-use features
• Why it's strong: The great first-year rate is the prime draw, but so is the ultra-low joining threshold of one penny. We love how you can connect it to your bank account, too. You can set Plum to round up transactions (for example, from £2.70 to £3.00) and it'll deposit the difference in your savings account. It’s saving by stealth
• Things to watch: That 4.65% includes a bonus rate that kicks in on your 12-month anniversary. Plus, in year two, the rate drops to 3.36%
• Best for: People who want a creative way to build up their savings quickly, that doesn’t leave them out of pocket
• H3: 3. Tembo: no-nonsense rate
• Rate: 4.10% AER (variable)
• Facts: Tembo's rate is slightly behind the top two, but here's what makes it interesting Its 4.10% offer is straight-up with no teaser bonus or intro offer nonsense
• Why it's strong: Hate those "big rate for 12 months then it tanks" offers? 4.10% is what you get, full stop, with no drop in the following years
• Things to watch: You're giving up about 0.5–0.6% compared to Moneybox/Plum in year one
• Best for: Savers who want a clean rate without gimmicks

4. Paragon Bank: best traditional option

• Rate: 3.51% AER (variable)
• Facts: Prefer an actual bank rather than a fintech app? Paragon's your best bet. This is a proper online bank, ready to onboard any existing LISAs you hold with FSCS protection of up to £85k
• Why it's strong: From a traditional bank, this is a very high rate, although there are higher rates on the market. If you bank with them, you can manage your LISA account inside the normal app
• Things to watch: If you struggle with leaving money on the table, you'll struggle with this. A 1% rate difference might not be much in one year but compounded over a decade or longer and it soon adds up
• Best for: People who want a straightforward online bank and aren't chasing the absolute highest rate

5. Bath Building Society: local, mutual, established

• Rate: 2.85% AER (variable)
• Facts: Bath is the classic option on this list. It's a small mutual that's been helping people save up for over 120 years. Priding itself on the personal touch, you can manage your LISA in branch, in app, and online
• Why it's strong: Want to support a proper local British mutual instead of faceless Big Tech? This is your winner. The rates aren't amazing but they're not bad either
• Things to watch: They don't let you transfer existing LISAs in from other providers. Also, keep an eye on their interest rates as they may move independently of the base rate and cost you money
• Best for: Anyone who values human support over maximum interest. If you live in Bath, you can pop into one of their two branches

So... which one wins?

Here's the thing: the 25% government bonus is identical everywhere.

Where providers compete is the interest rate on top:

• Want the highest first-year payout? Moneybox at 4.69% wins.
• Like high rates and proactive savings management? Plum at 4.65% delivers both.
• Hate intro bonuses that eventually drop? Tembo's straight 4.10% is your friend.

Now, the ball’s in your court. Good luck and happy saving!