Martin Lewis: We may finally see some changes to the Lifetime ISA in the Budget
A penalty paid by first-time buyers accessing savings in Lifetime ISAs (LISAs) when buying homes above the scheme's £450,000 property price limit could be scrapped, or the limit could be raised "to somewhere in the £500,000s", says Martin Lewis. The MoneySavingExpert.com founder believes changes could be afoot in the upcoming Budget on Wednesday 26 November.
Update: Wednesday 26 November 2025: No immediate changes to the Lifetime ISA (LISA) have been announced by the Chancellor in today's Budget. However, Rachel Reeves has revealed plans to consult on a new scheme for first-time buyers to replace the LISA. For the latest, see Lifetime ISA shake-up announced.
Martin Lewis: 'I think we may finally see some changes to the Lifetime ISA'
Writing on X on Thursday 20 November 2025, Martin said:
I think we may finally see some changes to the Lifetime ISA in next week's Budget. Currently, if you try and use your savings to buy a property over £450,000, never mind you don't get the 25% bonus, you have to pay an effective fine of 6.25% of your money to the state.
I think one of two things will happen (I've been pushing for them):
They get rid of the fine if you're buying a bigger property (so you don't get the bonus, but do get all your money back).
They increase the threshold to somewhere in the £500,000s (which is where it would be with inflation if it'd increased since 2017 when it was launched).
Or maybe both – nah actually – unlikely, only one!
LISAs are still beneficial for many
LISAs are designed to help people aged 18 to 39 buy their first home or to save for retirement. Savers get a 25% Government boost when they use the funds to buy a qualifying first home. They're a powerful product – still beneficial to many – which can give a huge boost to first-time buyers' savings.
But the scheme's £450,000 house price limit has remained frozen since it launched in 2017, despite house prices rising significantly since then. This has left some first-time buyers unable to find a suitable property under the limit, and savers buying a home that no longer qualifies are then effectively charged a 6.25% penalty on their own money when withdrawing – something we've been campaigning to fix since January 2023.
Martin has also warned that the fine may disproportionally affect those on lower incomes, saying: "When there is an off-putting thing like a penalty, that will disproportionately go to those who are less financially educated, who tend to be those from lower income backgrounds."
The cross-party Treasury Committee says the way LISAs work with Universal Credit (UC) also needs looking at. While people with over £6,000 saved start to lose their entitlement to UC (and by £16,000 don't get any) – pension savings don't count towards that, but LISA savings, even if for retirement, do.
The Committee's report said: "People saving for retirement using a LISA who might otherwise be eligible for UC are at a significant disadvantage compared with people using other pension products."
Responding to this report in September, the Government said that it believed the withdrawal charge "ensures that the LISA has been used for its intended purposes: homeownership for first-time buyers or later life savings".
At the time, Martin said the upcoming Budget could still be an opportunity for the Government to address the "serious holes" in the scheme.
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