Both pay you a 25% bonus on contributions. SIPP wins if you are a higher-rate taxpayer. LISA can win if you are not. The crossover depends on your retirement tax rate.
Age controls LISA eligibility. Current and retirement tax rates drive the SIPP arithmetic.
Net you put in (capped at the £4,000 LISA limit), the years it grows for, and the assumed real return.
Why SIPP wins for you: you get tax relief at 40% on the way in. LISA gives a flat 25% bonus regardless of your rate. For higher and additional rate taxpayers, SIPP relief is more valuable than LISA bonus, even after retirement tax.
UK 2025/26 figures. LISA cap £4,000 a year, 25% government bonus, eligible to open before 40 and contribute until 50, tax-free at withdrawal from 60. 25% penalty on early withdrawal except for a first-home purchase. SIPP modelled as gross-up at current marginal rate; withdrawal as 25% tax-free + 75% taxed at retirement marginal. Not advice.
Worth runs LISA vs SIPP against your real bands and projects the after-tax retirement value side by side. Join the waitlist.
Yes. LISA and SIPP are separate wrappers with separate allowances. Most people who can do both should - the LISA fills the £4,000 cap once a year, and a SIPP catches everything else. The calculator answers 'where does the next £1 go first' - it does not assume an either/or choice.
Outside of a first-home purchase or age 60+, LISA withdrawals lose 25% of the balance (not just the bonus). On a £5,000 in-pot balance you would only receive £3,750. That penalty makes LISA unsuitable as a flexible savings wrapper - treat it as a retirement product.
That tips further toward SIPP, not against. SIPP's downside is withdrawal tax; if you drop two bands (e.g., higher rate now to no tax in retirement, by spreading withdrawals across the personal allowance), the SIPP advantage gets bigger. LISA's tax-free withdrawal is mathematically equivalent to a no-tax-retirement SIPP.