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Annual reviews and ongoing service
Lifetime ISA: £4,000 a year, £1,000 bonus, first payment before 40, and what a client opening at 39 can still earn
A Lifetime ISA takes £4,000 a year with a 25% bonus up to £1,000, first payment before 40, payments until 50. A client opening at 39 can add up to 11 years.
A paraplanner is preparing a review for a 38-year-old client with a salary of £48,000 and a deposit goal in about six years. The client has used their general ISA and wonders about "that Lifetime ISA thing". The question is how much of the benefit remains if they open it now rather than next year. The rule has a cliff at 40, and this guide counts what sits either side.
The rule on GOV.UK
You can put in up to £4,000 each year, until you are 50. The government adds a 25% bonus on what you save, up to a maximum of £1,000 a year. You must make your first payment before you are 40. At 50 you cannot pay in or earn the bonus. The £4,000 uses part of the overall ISA allowance, which is £20,000 for 2026 to 2027.
The page I read for this guide did not carry the withdrawal charge or the house-price cap. Those are on other GOV.UK pages and matter for any advice about when the money will be used.
The numbers for one year
| Amount | |
|---|---|
| Client pays in | £4,000 |
| Bonus at 25% | £1,000 |
| In the account | £5,000 |
| Share of the ISA allowance used | £4,000 of £20,000 |
| Allowance left for other ISAs | £16,000 |
Our arithmetic. The bonus is 20% of the final £5,000, which is a clearer way to say it to a client who thinks "25% sounds too good".
The cliff at 40
The years that remain depend on the age at the first payment: payments can continue until 50.
| Age at first payment | Years of payments to 50 | Maximum bonus at £1,000 a year |
|---|---|---|
| 25 | 25 | £25,000 |
| 30 | 20 | £20,000 |
| 35 | 15 | £15,000 |
| 39 | 11 | £11,000 |
| 40 | not allowed | £0 |
The count is our own, from "before you are 40" and "until you are 50"; whether the final year at 50 counts depends on the exact date of the birthday, so test the dates for your client. A client whose 40th birthday falls in three months has a window to open the account in this tax year and one only.
Why the date matters more than the amount
The amount a client can pay in is the same each year; what falls away at 40 is every year of bonus after that. A client who is 39 and 9 months and says "I will think about it" has, in practice, decided to forgo up to £11,000 of bonus. That is worth saying plainly in the review, with the figure beside it.
What to put on the review note
- The first payment date, since it protects the whole later series.
- Which ISA the £4,000 comes from, because it comes out of the same £20,000 as a cash or stocks and shares ISA.
- What the money is for. The page's overview did not cover withdrawal; read it before suggesting the account for anything other than a first home or retirement.
- Joint use. The page speaks of "you", so a couple is two accounts.
This sits next to the annual review itself: see the annual review checklist and the firm's own costs in the FCA fees and FSCS levy guide.
Overlyft 
builds AI staff who join your advice team and read your client list before each review season, flag clients with a 40th birthday in the next 12 months and no Lifetime ISA, and prepare the one-page note for the adviser to review.
This is general information, not financial advice. Check GOV.UK and the client's circumstances before you advise.
Where this comes from: GOV.UK, "Lifetime ISA" (up to £4,000 each year until you are 50; 25% government bonus up to £1,000 a year; first payment before 40; £4,000 uses part of the overall ISA allowance, £20,000 for 2026 to 2027). The withdrawal charge and the property price cap are on other pages and were not read. Read 11 October 2026.
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AEO Lookup editorial team
We write practical guides for people who run small UK firms, and we check every fact against its source on the date shown. Read how we review, or tell us if something has changed.
