Stocks & Shares Lifetime ISA (LISA) allows you to collect a 25% government bonus while investing your savings making it perfect to achieve goals like retirement or first-time home buying. In comparison to Cash LISA, your money is invested in the stock market, offering higher growth potential, though riskier.
How a Stocks & Shares LISA Works
- Government Bonus: Save up to £4,000/year and the government adds 25% (max 1,000).
- Tax-Free Growth: Capital gains or dividend tax on investment is not applied.
- Withdrawal Policies:
- First home ≤ 450k or 60 years of age Penalty-Free, Rest with a 25% penalty for other withdraws.
Best Stocks & Shares LISA Providers (2025)
Compared to Cash LISAs, Stocks & Shares LISAs have the potential to grow more (with risk) because they invest your money in markets. Providers offer either:
Providers offer either:
- Managed investments (experts select the assets).
- Self-directed investing (you choose the assets).
Here are the top platforms:
| Provider | Fees | Min Deposit | Key Features | Cash Interest |
|---|---|---|---|---|
| AJ Bell Dodl | 0.15% (min £1/month) | £100 lump or £25/month | • 6 risk-based portfolios • Themed investments • Ethical option | 4.58% |
| AJ Bell | 0.25% | £500 lump or £25/month | • DIY or ready-made • £5 trading fee • 0.75% FX fee | 2.07% (≤£10k) |
| Tembo | 0.35% | £1 | • Single ethical portfolio • No cash interest | N/A |
| HL | 0.45% (scales down) | £100 lump or £25/month | • Tiered fees (↓0.1% over £2M) • 4 risk portfolios | 2.53% |
| Moneybox | 0.45% + £1/month | £100 lump or £25/month | • 6 portfolios (3 ethical) • Round-up saving tool | 3% |
| Nutmeg | 0.75% | £500 | • 30 portfolio options • 1% cashback on transfers* | N/A |
Notes:
- Lowest cost: AJ Bell Dodl (0.15%)
- Best for beginners: Moneybox (easy-to-use app + ethical options)
- High-net-worth: Hargreaves Lansdown (tiered fees become more favorable after £250k)
- All have FSCS protection (£85k limit)
*Nutmeg’s 1% cashback promo comes with £10k transfer minimum.
Choosing the Right Stocks & Shares LISA Provider
✔ Nutmeg (30 portfolios) or Moneybox for hands-off investing
✔ AJ Bell (low fees) or HL (good research tools) for DIY trading
✔ Tembo or Moneybox’s ESG portfolios for Ethical focus
Important Note: The value of investments can go down. If you’re buying a house and plan to use the funds in less than 5 years, consider a Cash LISA.
Pros & Cons of a Stocks & Shares LISA
✅ Advantages
- Higher returns than cash savings (historical average of 5-7% annually).
- Diversified investments (ETFs, funds, shares)
- Ideal for retirement: compounding growth over decades.
❌ Disadvantages
- Investment risk (values may fall)
- Cap on home price £450k (limiting in most expensive areas).
- Fees for withdrawals before term.
Who Should Get a Stocks & Shares LISA?
✔ First-time buyers expecting to purchase after 5+ years.
✔ Comfortable with risk and flexible long-term investors (5+ years).
✔ Ages 40 and under (age limit is 40).
Alternatives to Consider
- Cash LISA: Less risk for those looking to buy homes in the next 1-5 years.
- Retirement Account: More complex for those looking to retire (no 25% bonus).
- General Investment Account (GIA): No cashing out fees (but taxable).
Final Thoughts
Stocks and Shares LISAs are the ideal choice for long-term wealth-building, so long as permanent access to the capital is not required for some time. Invest through AJ Bell, HL, and Dodl if you are looking to spend less.
Important notes:
- Start early to enable the effects of compound interest.
- Avoid withdrawals other than for retirement/home purchases.
- Spread investments across different asset classes or geographies like global index funds.
