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Reviewing the Lifetime ISA

Since its inception in 2016, the Lifetime ISA has helped people to save towards the twin goals of house purchases and retirement. Savings of up to £4,000 each year into a Lifetime ISA are boosted by a 25% contribution from the Government.

There are restrictions though, with individuals having to be under forty when they set up the Lifetime ISA and investments having to stop when someone turns fifty. Penalty-free withdrawals can only be made for the purchase of a first home, after the age of sixty, or after a terminal illness diagnosis. Otherwise there is a 25% withdrawal charge. Nevertheless, statistics show that in the 2023/24 tax year 56,900 individuals used their Lifetime ISA to help with a property purchase.

The Treasury Select Committee in the House of Commons has decided to take a look at the Lifetime ISA and review whether it is still an appropriate savings product. The committee has called on finance experts and consumers to answer a range of questions from whether the limit should be raised to whether the product should be phased out. The consultation ends on 4 February 2025.

If you are looking for advice on investments or if your situation has changed and you may therefore need to review your existing pensions or investments, contact Beckworth by using one of the links on our website.