Martin Lewis gives 10-point summary as more info on Lifetime ISA replacement plans revealed

MSE_Emily

Further details on plans to launch a First-Time Buyer ISA (FTB ISA) have been published by the Government today (23 June 2026). The key for existing Lifetime ISA (LISA) holders – the current savings vehicle for first-time buyers – is that your LISA will continue as is, even if, and when, its replacement starts. MoneySavingExpert (MSE) founder Martin Lewis posted this quick summary on his social media.

Read the full story:

https://www.moneysavingexpert.com/news/2026/06/lifetime-first-time-buyer-update/

jungleboy123

clause 8 - The bonus will be paid at exchange, so withdrawal before then won't incur a penalty.

Does that mean this will still have a penalty for withdrawals?

Is it still a max of £1k HMRC contribution for max £4k a year?

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82048097#Comment_82048097

The lack of withdrawal penalties is one of the prominent features of the new product, and deferring bonus payment until property purchase facilitates this, in the same way that HTB ISAs work.

The contribution limit and bonus percentage are still to be decided, after this consultation - although the MSE article chooses not to link to the actual consultation document, it's linked in this thread:

https://forums.moneysavingexpert.com/discussion/6673645/new-first-time-buyer-isa-to-replace-lisa

jungleboy123

thanks. i think the negative is again not being able to transfer the amount / bonus from the lifetime ISA into this product.

I got stung similar when the HTB ISA got replaced by the LISA, i should have really been paying into the LISA earlier but kept paying into the HTB.

The contribution limit and bonus percentage are still to be decided,
after this consultation

They keep coming up with new ISAS without helping anyone by being able to just move it all.

Means if this actually gives a better bonus amount than the LISA then me/others wanting to buy a first house will lose out continuing to fund the LISA over time (i think…)

eskbanker

i think the negative is again not being able to transfer the amount / bonus from the lifetime ISA into this product.

I got stung similar when the HTB ISA got replaced by the LISA, i should have really been paying into the LISA earlier but kept paying into the HTB.

They keep coming up with new ISAS without helping anyone by being able to just move it all.

You were able to move an HTB ISA in its entirety into a LISA during the first year of the latter product, as a one-off transitional arrangement.

Means if this actually gives a better bonus amount than the LISA then me/others wanting to buy a first house will lose out continuing to fund the LISA over time (i think…)

Unlike LISA v HTB, they'll allow both LISA and FTB ISA to be used together towards a first property purchase, so you can have one of each and choose which one to fund going forward, i.e. you don't have to commit to one or the other.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82048546#Comment_82048546

If they were to offer a transfer option, then it would be necessary to impose a 20% penalty, otherwise you'd get the bonus twice on the same money. I suspect they didn't want to do that is it would upset people.

jungleboy123

https://forums.moneysavingexpert.com/discussion/comment/82048981#Comment_82048981

thanks for this. very helpful. i was definately asleep at the wheel then when the LISA/HTB isa transfer was happening.

Interesting they can both be used together, i guess would allow flexibility to decide which product is offering better rates.

Do you know if it is used together but if say someone wants to keep the LISA open but keep paying into it after the property purchase then that would be possible, assuming that the FTB ISA is all used up and closed? I think by default you can keep LISA open after purchasing first home, but not sure if combined? Maybe i am completely wrong!

jungleboy123

wouldnt they just transfer the bonus accrued across rather than pay double or is that just too administrative for HMRC/Bank?

masonic

https://forums.moneysavingexpert.com/discussion/comment/82051122#Comment_82051122

Then you could just transfer in your LISA, close the homebuyer ISA and walk away with the bonus penalty free without needing to buy a home.

Even if you were to play fair, in the new product your conveyancer applies for the bonus after you make the withdrawal, so they would need to deduct any bonus paid too early within the LISA if there was a transfer route. Otherwise it would be too difficult to determine how much more bonus needed to be paid when the conveyancer applied for the bonus (ISA could get transferred around, or a partial withdrawal could be made). Also, if you withdraw a sum that isn't eligible for the bonus for any reason, you'd already have been paid it. There won't be an early access penalty on the new product to remove a bonus already received from the LISA.

It's far easier if all money within the new product is without bonus, and the conveyancer applies for the bonus based on the final balance or amount being used towards the purchase.