How This Tool Works
📋 Purpose
The UK\u2019s two big tax-advantaged savings wrappers have opposite strengths for first-time buyers. LISA gives an instant 25% bonus but caps property value at £450k and penalises non-qualifying withdrawals. Pension gives marginal-rate tax relief plus NI savings plus employer match, but locks the money until 55+. This tool compares both with YOUR salary, contribution, horizon and employer match to answer one question: which wrapper puts more money in your first-home deposit?
⚙️ How It Works
- 1Enter your age, salary and monthly contribution capacity.
- 2Set purchase horizon (years until you buy).
- 3Set investment return expectation.
- 4Enter employer pension match percentage.
- 5Select region (for projected FTB price).
- 6We calculate LISA pot with 25% bonus and property cap penalty.
- 7We calculate pension with tax relief + NI savings + employer match.
- 8Compare usable-for-home amounts side-by-side.
LISA vs Pension for First Home — 2026
Which £ for £ gets you into a first home faster: LISA or Pension?
The Lifetime ISA gives a flat 25% government bonus up to £1,000/year, but caps the property price at £450,000 and adds a 25% penalty if you withdraw for a non-qualifying reason. A pension gives tax relief at your marginal rate plus NI savings (worth 28% basic / 48% higher), plus any employer match, but locks the money until 55 (rising to 57 by 2028). This tool runs both scenarios with your numbers and tells you which wins.
About you
LISA caps at £333/mo (£4k/yr). Above this goes to pension only.
ONLY applies to pension, not LISA.
First-home context
Long-run UK average ~3%/yr. London FTB may exceed.
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Complete Guide: LISA vs Pension for Your First UK Home
The tax wrapper tradeoff that changes your deposit size — and retirement pot — dramatically.
📅 Last updated: April 2026
Quick Tips
Jump-start your understanding with these essential tips
You can only OPEN one between 18–39. If you're close to 40, open with £1 as a standby even if you don't contribute immediately.
A 5% employer match is an instant 100% return on your contribution. Never skip free money for a LISA bonus.
For 40% taxpayers, pension relief (40% + 8% NI = 48%) beats LISA (25%) comfortably. But lockup until 55 is the catch.
At £450k cap frozen since 2017, most London FTB purchases now exceed the cap. Using LISA on an over-cap property = 25% penalty on your whole pot.
Max employer match + max LISA + extra pension or ISA. This tool models which to prioritise above the baseline.
Step-by-Step Guide
Follow these steps to get the most from this tool
Age determines LISA eligibility (must open before 40) and pension access year (55 for most, 57 from 2028 onwards for under-58s). Salary determines marginal tax rate.
Realistic monthly savings — this is what you'd put in either wrapper. LISA caps at £333/month (£4k/yr); above this we only model in pension.
Years until you intend to buy. Shorter = LISA more favourable (25% bonus realised quickly). Longer = pension compounds tax relief more.
5% is the conventional long-run assumption for a balanced portfolio. Higher-risk equity-only: 7%. Cash LISA: 2-4%.
Check your benefits portal. Most UK employers offer 3–6% matched. Some offer up to 10%. This ONLY applies to pension, not LISA — and it's usually decisive.
Regional median FTB prices from ONS. The tool uses 3% HPI growth by default — adjust to 2% for cautious, 5% for London bull case.
Warnings flag property-cap risk, LISA age cut-off, and pension inaccessibility. Chart shows contributions / bonuses / growth / final usable for each wrapper.
Advanced Topics
Deep dives for advanced users
Salary sacrifice converts £1 of gross pay into £1 of pension contribution, saving income tax AND employee NI (2% or 8% depending on salary band). Some employers also share the employer NI saving (13.8% of gross) as additional pension contribution. Ask HR — this can add another 10%+ to pension growth. Not all schemes offer SS; relief-at-source schemes only save income tax.
For basic-rate taxpayers: LISA 25% bonus ≈ pension 25% relief (grossed up). Roughly tied on relief alone; LISA wins on accessibility. For higher-rate: pension 40% relief (grossed up: 66.7%) crushes LISA 25%. For basic-rate approaching higher-rate threshold, consider pension contributions to stay below £50,270 and preserve personal allowance.
London median FTB price hit £500k+ in 2023 and has continued rising. Using LISA on a £500k property triggers 25% penalty on the whole pot (not just the amount above cap). For London FTBs, LISA is a high-risk bet unless you're confident of buying under £450k (smaller 1-bed flats / commuter-belt properties).
Some older pension schemes protect age 55 access beyond the 2028 change to 57. If you have an older scheme — especially public sector or a pre-2006 personal pension — check the rules. A protected age 55 makes pension much more viable for FTBs currently aged 45-54.
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