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4w ago

MPs Press for Lifetime ISA Overhaul Before Budget After Government Shuns Rule Changes

MPs say punitive design misdirects savers, raising doubts about value for taxpayers.

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Chancellor of the Exchequer Rachel Reeves. A report from the Treasury Committee in June said Labour should consider whether it “has a future in its present form”. (Photo: Wiktor Szymanowicz/Future Publishing via Getty Images)

Overview

  • The Treasury Committee said ministers have not heeded repeated warnings and urged concrete Lifetime ISA reforms ahead of November’s Budget.
  • Committee findings cited HMRC research showing 87% of buyers who used a LISA said they could have purchased without it, with the scheme forecast to cost about £3bn over five years.
  • MPs want LISA balances treated like pensions in Universal Credit means tests or, failing that, prominent warnings that savings could disadvantage future claimants.
  • The Government defended the product, pledged clearer messaging with providers, and highlighted 1.3 million open accounts and 227,600 first-home purchases since 2017.
  • FOI figures reported by GB News showed severe early-withdrawal penalties averaging £10,600 on £42,300 withdrawals, underscoring criticism of the 25% charge.