Lifetime ISA to be replaced - 28th January 2026

The Government is expected to publish its consultation next month about a replacement ISA product to be available from April 2028. The decision to revisit the Lifetime ISA stems from criticism that the current ‘LISA’ product has become complex and ineffective at meeting its original goals. 

The LISA was designed to help both first-time homebuyers and retirement savers but many analysts and experts argue it hasn’t met either purpose effectively. The government wants a simpler savings vehicle specifically for first-time buyers, rather than a hybrid product.   

The new ISA product is expected to be aimed at first-time buyers, with a much clearer focus designed purely to help people build up a deposit for their first home. 

Instead of bonuses being added month by month whilst saving, the proposal could move to a single lump-sum bonus paid when the home purchase  completes. This would stop bonuses being paid on savings that are later withdrawn and used for something else. 

Another key area under review is the withdrawal penalty. The consultation is expected to look at removing the Lifetime ISA penalty altogether or replacing it with a system that doesn’t punish people if their circumstances change and they don’t end up using the money as originally planned. 

Finally, the government may revisit the property price limits attached to the scheme. The current cap of £450,000 is widely seen as out of date, particularly in higher-cost areas, so updating or removing it altogether is likely to be part of the discussion.