We’ve got some reassuring news to share with the Moneybox community, especially our Lifetime ISA savers.
Following the 2025 Autumn Budget, where the government announced that a new First-time Buyer ISA product would be consulted on, HMRC has now clarified that even after it’s introduced, the Lifetime ISA will remain, and existing savers will be able to deposit indefinitely under the current rules. You’ll also still be able to open a Lifetime ISA until that new product becomes available.
This update follows ongoing discussions about potential changes to the first‑time buyer savings landscape. As the UK’s biggest Lifetime ISA provider and the voice and champion of first-time buyers, we’ve been actively engaging with policymakers to make sure your voice is heard in these discussions, and that long‑term confidence in the Lifetime ISA is protected.
What this means for you
In short: your Lifetime ISA isn’t going anywhere – and you can keep using it with confidence, whether you’re saving for retirement or your first home.
- You can keep depositing into your Lifetime ISA beyond the launch of any new first‑time buyer product
- Your saving plans don’t need to change, unless you want to change them
- The 25% government bonus (up to £1,000 a year) remains
This update ensures 1.5 million existing Lifetime ISA savers can contribute under the current rules, and you can continue to make meaningful progress.
Govt. withdrawal charge may apply. ISA and tax rules apply. For S&S LISA, capital at risk.
A new First Time Buyer ISA is coming
The government has also confirmed that a consultation on a new First Time Buyer ISA product will begin in mid to late February 2026.
We’ll be actively participating in that consultation as the voice and champion of first-time buyers, as we have done through past forums, including the Treasury Select Committee consultation on the Lifetime ISA in 2025. Our focus will be on ensuring that any future changes genuinely improve outcomes for first‑time buyers nationwide – without creating unnecessary complexity or uncertainty for people already doing the right thing by saving.
As Brian Byrnes, Director of Personal Finance at Moneybox, explains:
“Savers can take comfort in the fact that HMRC has clarified people can continue to open Lifetime ISAs until the new product is available, and that existing holders will be able to keep contributing indefinitely. This matters not only to the 1.5 million people who already rely on the product, but also to anyone planning to open a Lifetime ISA while a new first-time buyer specific product is being developed.”
Future-proofing the Lifetime ISA
Moneybox has long campaigned for targeted reforms to future-proof the Lifetime ISA, advocating for improvements that make the system fairer, clearer and better aligned with today’s housing market. Key improvements we support include:
- An annual review of the property price cap
- A reduction of the withdrawal penalty from 25% to 20%
These measures provide certainty and confidence for savers, without the need to replace the product entirely.
As Brian puts it:
“The Lifetime ISA has been hugely successful in helping people save for their first home, but there are small, well-known improvements that could make it work even better for everyone. By the time any replacement product is introduced, around two million people are likely to be using a Lifetime ISA to save for their first home or build their retirement savings, and a new product would not address these areas for enhancement. Instead of creating an entirely new product, policy should focus on future-proofing the Lifetime ISA with targeted reforms such as regular reviews of the property price cap and reducing the withdrawal penalty from 25 per cent to 20 per cent, providing certainty for both savers and providers.”
What to do now
For most Lifetime ISA customers, the answer is simple: keep saving. You can continue contributing up to £4,000 each tax year and still benefit from the 25% government bonus – up to £1,000 every tax year. Most importantly, your Lifetime ISA remains protected – whether you’re saving for retirement, or your first home.
Thinking about opening a Lifetime ISA? The same applies. The Lifetime ISA is still one of the most effective ways to boost your deposit or retirement savings – because of the 25% government bonus and the opportunity to earn interest or gains on top.
We offer a Cash Lifetime ISA and a Stocks & Shares Lifetime ISA. If you’re buying a home in five years or more, or saving for retirement, you might want to consider our Stocks & Shares LISA to grow your money through investing. If your timeline is shorter, or you prefer earning interest and saving in cash, take a look at our Cash Lifetime ISA.
We’ll continue to keep you updated as the consultation progresses, so you can make informed decisions with confidence. Because when you’re planning for something as big as your first home or retirement, confidence matters.
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.
Tax treatment depends on individual circumstances and may be subject to change in the future.
It’s important to consider your personal circumstances and the relevant pros and cons offered by each type of account. You can pay into a Workplace Pension, and/or a Personal Pension as well as a Lifetime ISA. If you decide to opt out of your workplace pension and instead pay into a Lifetime ISA, you will not benefit from any employer-matched contributions as you would with a Workplace Pension.
It may also affect your current and future entitlement to means-tested state benefits. If considering the Lifetime ISA only for the purposes of retirement, we recommend you speak with an independent financial advisor.