MSE News: Martin Lewis asks Chancellor to raise the Lifetime ISA limit and answers viewer's question

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MoneySavingExpert.com founder Martin Lewis has once more pressed the Chancellor Rachel Reeves to increase the Lifetime ISA (LISA) limit from its current £450,000 cap. In the latest episode of ITV's The Martin Lewis Money Show Live, Martin also answers a viewer's question on whether to continue to contribute to their LISA given plans revealed in the Budget to consult on replacing the product next year...

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'Martin Lewis asks the Chancellor to raise the Lifetime ISA limit and responds to whether you should still add to a LISA given it may be ditched'

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MattMattMattUK

I am not sure I can really see a justification for increasing this. Those with £450k in in a LISA will be getting significant benefits from the taxpayer, and standard ISAs are also available for those wealthy enough to be able to throw large amounts into saving every year. If there is money available for what is essentially a tax break then there are far better ways for this to be spent, or not spent at all and used for debt repayment. 

gravel_2

MattMattMattUK said:

I am not sure I can really see a justification for increasing this. Those with £450k in in a LISA will be getting significant benefits from the taxpayer, and standard ISAs are also available for those wealthy enough to be able to throw large amounts into saving every year. If there is money available for what is essentially a tax break then there are far better ways for this to be spent, or not spent at all and used for debt repayment. 

Why comment if you don't even know what the LISA cap is? It's not a cap on amounts held in the LISA, it's the max property price the LISA can be used to purchase.

MeteredOut

gravel_2 said:

MattMattMattUK said:

I am not sure I can really see a justification for increasing this. Those with £450k in in a LISA will be getting significant benefits from the taxpayer, and standard ISAs are also available for those wealthy enough to be able to throw large amounts into saving every year. If there is money available for what is essentially a tax break then there are far better ways for this to be spent, or not spent at all and used for debt repayment. 

Why comment if you don't even know what the LISA cap is? It's not a cap on amounts held in the LISA, it's the max property price the LISA can be used to purchase.

And the thinking was that anyone who could afford a £450K house did not need the tax breaks. That argument has not been completely removed, though I do think the penalty for withdrawal is unfair - let people get back the money they put in.

I think there's also an argument for keeping the limit at it is in at attempt to encourage more people to buy property outside of the south east and hopefully bring more parity to housing costs across the country.

gravel_2

MeteredOut said:

gravel_2 said:

MattMattMattUK said:

I am not sure I can really see a justification for increasing this. Those with £450k in in a LISA will be getting significant benefits from the taxpayer, and standard ISAs are also available for those wealthy enough to be able to throw large amounts into saving every year. If there is money available for what is essentially a tax break then there are far better ways for this to be spent, or not spent at all and used for debt repayment. 

Why comment if you don't even know what the LISA cap is? It's not a cap on amounts held in the LISA, it's the max property price the LISA can be used to purchase.

And the thinking was that anyone who could afford a £450K house did not need the tax breaks. That argument has not been completely removed, though I do think the penalty for withdrawal is unfair - let people get back the money they put in.

I think there's also an argument for keeping the limit at it is in at attempt to encourage more people to buy property outside of the south east and hopefully bring more parity to housing costs across the country.

I'm not sure the 450k limit was about discouraging buyers in the South. Wasn't it just scrapping the lower "outside London" limit that applied to the H2B ISA?

ColdIron

Given that the LISA product is planned to be ditched for 'a new product, better product' I can't see much mileage in discussing constraints on something due to be deprecated

Kim_13

ColdIron said:

Given that the LISA product is planned to be ditched for 'a new product, better product' I can't see much mileage in discussing constraints on something due to be deprecated

It needs to be kept in the public consciousness so that policy makers don't just replace it and forget those that are no longer able to buy a property without paying a penalty to access their own deposit savings. 

Alexland

ColdIron said:

Given that the LISA product is planned to be ditched for 'a new product, better product' I can't see much mileage in discussing constraints on something due to be deprecated

The problem is there are people who have already contributed to LISAs and are now finding that with house price inflation it is / will be a real problem for their intended purchase. It's not clear yet if there will be a way for property buyers to migrate their existing accounts to the new product without paying the full withdrawal fee etc.

The best thing they could do to close the product is simply converting them to Cash or S&S ISAs and let existing holders withdraw or transfer out penalty free but they are unlikely to be that helpful sadly. For me that would be enough compensation for not getting the last few years of bonuses I had been promised I could earn before 50.

ColdIron

It's a worry for existing LISA holders

I think it unlikely that we see an increase in the limit at the eleventh hour in a moment of largesse