Gareth Hoyle · Founder & Editor
Reviewed May 2026. Independent researcher, not a financial adviser. About Gareth
If your goal is buying a first home or saving for retirement and you're aged 18–39, the 25% government bonus on a Lifetime ISA is hard to beat. If your goal is higher tax-free income and you accept investment risk, a peer-to-peer ISA is a different tool entirely. For many eligible savers, the LISA bonus makes it the obvious first port of call.
| Peer to peer ISA | Lifetime ISA | |
|---|---|---|
| Main purpose | Higher tax-free income | First home or retirement |
| Government bonus | None | 25% on up to £4,000/year |
| Age limits | 18+ | Open 18–39, pay in to 50 |
| Risk to capital | High, capital at risk | Depends (cash or investment LISA) |
| Withdrawal penalty | No penalty (but access can be limited) | Charge if not for a first home / age 60+ |
| Annual limit | Up to £20,000 | £4,000 (within the £20,000) |
A peer to peer ISA suits…
- · Income-focused investors who accept risk
- · People who've already used any LISA bonus
- · Those wanting to diversify a small slice of savings
A Lifetime ISA suits…
- · First-time buyers aged 18–39
- · Long-term retirement savers wanting the bonus
- · Anyone who can leave the money until a home or age 60
The honest take
If you're eligible and saving for a first home, the LISA's 25% bonus is effectively free money and usually wins. A peer-to-peer ISA is for a different job: generating income from money you can afford to put at risk. Read more in our types of ISA guide.
Keep reading
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Types of ISA explained
The five main types of ISA, how each works, who they suit and how they compare.
The £20,000 ISA allowance
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