Sun, 29 Jun 2025

Sun, 29 Jun 2025 Lifetime ISAs leave some with less money than they put in

MPs call for reform to the savings account which aims to help people save towards retirement or a first home.

* Some people who pay into a Lifetime ISA (LISA) may end up getting less money out than they put in due to charges.
* The Treasury Committee has warned that the LISA's complex rules and charges make it unsuitable for some consumers.
* Anyone under 40 can open a LISA, which allows them to save up to £4,000 per year with a government top-up of 25%.
* However, if LISA funds are withdrawn early due to unforeseen circumstances, people face losing 6.25% of their own savings.
* The committee has also raised concerns that the product may have been mis-sold to people on certain benefits.
* The rules penalise benefit claimants, making it difficult for them to access LISAs without affecting eligibility for universal credit or housing benefit.
* MPs are calling for reform of the LISA and have questioned whether it is "the best use of public money given the current strain on public finances".
* The Office for Budget Responsibility predicts that spending on bonuses paid on LISAs will cost the Treasury around £3bn over the next five years.
  >>