26 November 2025
If you are covering the news that the government will consult on Lifetime ISA reform and the implementation of a replacement ISA product for first time buyers, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
“At long last, the government has conceded that the Lifetime ISA is a confused product in desperate need of simplification. In early 2026, the government will publish a consultation on the implementation of a new ISA product which will replace the existing Lifetime ISA and focus solely on supporting first time buyers.
“As it currently stands, the Lifetime ISA has attempted to serve two distinct goals – saving for retirement and saving for a first home - but has failed to meet either effectively. While the 25% government bonus has been undeniably popular, the product itself has carried serious flaws and the withdrawal penalty has punished savers at a time when they have faced significant financial strain.
“What’s more, the house price cap of £450,000 has been unchanged since the product first launched in 2017 and has become increasingly detached from reality in many parts of the country. This has resulted in many people who have saved diligently, particularly those living in London and the South East, being unable to use their LISA for the property they need without facing a penalty. This has undermined confidence in the product and added complexity and must be addressed within the new product.
“As part of its consultation, the government should also look to reform the punitive 25% withdrawal penalty which often punishes savers for accessing their own money by taking back not only the government bonus, but some of their own savings too.
“For many first-time buyers, the LISA has provided genuine help, and a simplified offering should continue to meet the same need. However, there will be questions marks over how and if existing LISA holders will be affected, and the government will need to ensure they are not disadvantaged.”
