28 October 2026
If you are covering the Budget announcement around the LISA and the new First Time Buyer ISA, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
“Reducing the Lifetime ISA withdrawal charge from 25% to 20% for first-time buyers purchasing above the £450,000 cap addresses a longstanding unfairness. Removing the government bonus is one thing but eating into someone’s own savings is another.
“A new First Time Buyer ISA focused squarely on homeownership, without an upper age restriction or punitive withdrawal penalty, is a welcome attempt to fix some of the Lifetime ISA’s flaws. But retaining the £450,000 property cap risks carrying an old problem into a new product. A lifetime limit on the government bonus could be a fairer way of controlling costs than a rigid house-price ceiling that becomes increasingly outdated as property prices rise.
“The government should also be careful not to discard what worked well with the Lifetime ISA. Paying the bonus monthly means it can earn interest or investment returns alongside the saver’s own money as their deposit builds. If the new ISA instead pays the government bonus only when someone buys their home, savers lose that benefit.
“Protecting existing Lifetime ISA holders is welcome, but continuity must not become complexity. Existing savers should be able to transfer into the new account without penalty where it better suits their needs, rather than having to navigate three generations of home-buying ISAs with different rules. Consumers and providers will also need clarity over how the new account interacts with Your First Home and confidence that the latest scheme will have longevity."
