Is The Lifetime ISA Shariah Compliant?
The answer
As long as the Lifetime ISA account[1] does not accrue interest or is invested in Shariah compliant shares, the ISA will be compliant. If the ISA accrues interest or is invested in non-Shariah compliant shares, the ISA will not be compliant.
Condition: Compliant only if it earns no interest and is invested in Shariah-compliant shares.
Explanation
The 25% government bonus is permissible to receive.
Fiqh basis
The government bonus is in the ruling of a conditional gift and lawful upon receipt.
And Allah knows best.
Mufti Faraz Adam
References
1https://www.moneyadviceservice.org.uk/en/articles/a-guide-to-lifetime-isas
A Beginner’s Guide to the Lifetime ISA
https://www.ft.com/content/8e78606a-ec78-11e5-888e-2eadd5fbc4a4
https://www.fca.org.uk/publication/consultation/cp16-32.pdf
Based on the Hanafi school and on the question as it was asked. Another mufti may reach a different conclusion. Read the disclaimer.