MSE News: Martin Lewis: Is a Lifetime ISA win coming in the Budget?

silvermum

I hope any consultation will review the definition of a 'first time buyer/ homeowner' to allow young adults who may have inherited a share of a property to be included as first time buyers in future! It seems unfair that being left e.g. a 1/6th share of granny's retirement flat, which is then sold within a few months, defines them as having 'previously had an interest in property' and makes them ineligible for the current LISA? 

eskbanker

silvermum said:

I hope any consultation will review the definition of a 'first time buyer/ homeowner' to allow young adults who may have inherited a share of a property to be included as first time buyers in future! It seems unfair that being left e.g. a 1/6th share of granny's retirement flat, which is then sold within a few months, defines them as having 'previously had an interest in property' and makes them ineligible for the current LISA? 

There is obviously the counter-argument that the scheme is intended to provide assistance to those in most need of help accumulating a deposit, so excluding those with such windfall lump sums could easily be justified.  Did you contribute to the last consultation, I don't know if it was in there?

jrawle

Definitely not a "win" for anyone who uses a Lifetime ISA for retirement saving, and is quite aware of the rules, knows they have to wait until 60 or lose an effective 6.25%. That's what we signed up for.

I remember when MSE was for people savvy with money. Now Martin seems to treat it as a social service, often at the expense of those the site used to be for.

MSE_Helen_K

Thanks eskbanker for flagging the LISA announcement in yesterday's Budget. There's a bit more on this from Martin in our news story here: 

https://www.moneysavingexpert.com/news/2025/11/cash-isa-limit-cut-martin-lewis-budget/#lifetimeisa

eskbanker

MSE_Helen_K said:

Thanks eskbanker for flagging the LISA announcement in yesterday's Budget. There's a bit more on this from Martin in our news story here: 

https://www.moneysavingexpert.com/news/2025/11/cash-isa-limit-cut-martin-lewis-budget/#lifetimeisa

However, his claim there that:

I have been promised by a very senior member of the Government, that this will include looking at increasing the £450,000 threshold of the existing LISA as the people who have those, cannot be left with a dead product

needs to be treated with some caution, given the history of his predictions on this thread, including last year's:

Lifetime ISA win coming in budget?!

Good news! @POLITICOEurope has a scoop by @JamesFitzJourno that Chancellor will follow my suggestion and wipe the 6.25% Lisa withdrawal fine for anyone buying a home. If true, this'd fix the current dire system whereby when people are priced out and have to buy a home above £450,000 limit the state fines them to get access to their cash.

It suggests, less firmly, the limit will rise to £500,000 too.

and then last week's:

I think one of two things will happen (I've been pushing for them):

• They get rid of the fine if you're buying a bigger property (so you don't get the bonus, but do get all your money back).

• They increase the threshold to somewhere in the £500,000s (which is where it would be with inflation if it'd increased since 2017 when it was launched).

Or maybe both – nah actually – unlikely, only one!

Simple_Ideas

jrawle said:

Definitely not a "win" for anyone who uses a Lifetime ISA for retirement saving, and is quite aware of the rules, knows they have to wait until 60 or lose an effective 6.25%. That's what we signed up for.

I remember when MSE was for people savvy with money. Now Martin seems to treat it as a social service, often at the expense of those the site used to be for.

Quite the question that doesn't seem to be asked, signed up to a Lifetime ISA for retirement element (Lifetime), plan for a nice seperate pot from pension savings. If this product is to be scrapped where does it leave us, does it continue until everyone is over 60 with all bonuses (unlikely). The new product seems targetted at home buyers only so what would happen to our ISA savings, incl bonuses will we transfer to a normal isa and keep our bonuses (unlikely again, perceived too favourable) or will be be stuck in a 'dead' isa until 60 with unfavourable conditions ie no bonus, isa providers giving effectively minimum rates etc

dunstonh

Simple_Ideas said:

jrawle said:

Definitely not a "win" for anyone who uses a Lifetime ISA for retirement saving, and is quite aware of the rules, knows they have to wait until 60 or lose an effective 6.25%. That's what we signed up for.

I remember when MSE was for people savvy with money. Now Martin seems to treat it as a social service, often at the expense of those the site used to be for.

Quite the question that doesn't seem to be asked, signed up to a Lifetime ISA for retirement element (Lifetime), plan for a nice seperate pot from pension savings. If this product is to be scrapped where does it leave us, does it continue until everyone is over 60 with all bonuses (unlikely). The new product seems targetted at home buyers only so what would happen to our ISA savings, incl bonuses will we transfer to a normal isa and keep our bonuses (unlikely again, perceived too favourable) or will be be stuck in a 'dead' isa until 60 with unfavourable conditions ie no bonus, isa providers giving effectively minimum rates etc

Historically, tax wrappers close for new contributions but those that have them retain the product.   Then, often longer down the road, tax wrappers will be amalgamated.

For example, S226 RACs were replaced with personal pensions in 1988.   Then in 2006, S226s were given the same entitlements as personal pensions.   Or when PEPs ended, they maintained their PEP status but some years later, they were reclassfieid as ISAs.    TESSAs became cash ISAs.

However, some wrappers still maintain their original terms and haven't been merged/changed.

it won't ever become dead as it will still be available as a stocks & shares wrapper with full investment choices and most providers charge exactly the same as for LISAs as they do S&S ISAs.    The cash LISA market will almost certainly decline but nobody should be using a cash LISA for retirement planning.

SnowMan

From the HMRC Tax-free savings newsletter 19 - November 2025, published 27 November 2025

https://www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025

5. Lifetime ISA

The government will consult on introducing a new, first time buyer only product that will provide the bonus when a person uses it to buy a house, removing the need for a withdrawal charge and giving savers flexibility in case their circumstances change.

eskbanker

Perhaps also worth noting that the budget statement included:

4.230 Lifetime ISA Reform – The government 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.

which could mean that the LISA will be retained for retirement purposes - maybe S&S LISAs will continue and cash ones won't, although I imagine there could be industry reluctance to support an even wider product range, especially in the context of the relatively low number of providers offering LISAs in the first place....

newlease

LISA should be scrapped. It is counter productive. These campaigns do not support first time buyers only increases house prices. Those with LISA should be given the opportunity to transfer to another ISA and the "bonus" money should be used in a more targeted way.