Individual Savings Accounts
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the relative value for money of reforming the Lifetime ISA compared with introducing a new product to replace it.
Answered by Lucy Rigby
At Autumn Budget 25 the government announced that it will publish a consultation in early 2026 on the implementation of a new, simpler ISA product to support first time buyers to buy a home. Once available, this new product will be offered in place of the Lifetime ISA.
The LISA was designed to help people save for both their first home and later life. A 2025 report by the Treasury Select Committee, however, concluded the dual purpose has made it unnecessarily complex and that ‘the Lifetime ISA may not be the most efficient use of taxpayers’ money to achieve those disparate objectives’. In addition, the provision of an upfront bonus requires a withdrawal charge for non-compliant withdrawals.
HMRC have also conducted research into use of the Lifetime ISA which can be found here: Understanding the use of the Lifetime ISA: qualitative research - GOV.UK
The new design will include the government bonus being paid at the point the individual makes a withdrawal for a house purchase. This removes the need for a withdrawal charge and means a saver can withdraw funds, should their circumstances change, without penalty.
It will remain possible to open a Lifetime ISA until the new product becomes available and for account holders to continue to save into their Lifetime ISA in line with the existing rules indefinitely.
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