UK Government to Replace Lifetime ISA with First-Time Buyer ISA

The Government of the United Kingdom plans to launch a new first-time buyer ISA to replace the existing Lifetime ISA, with the new account expected to be available by 2028 at the earliest. The government intends to scrap the Lifetime ISA for new savers, stating that evidence suggests the current system "is not working well for many."

The proposed first-time buyer ISA aims to increase accessibility by removing the upper age limit and eliminating withdrawal charges. However, financial experts warn the new product may be less lucrative than its predecessor. While the Lifetime ISA provides monthly bonuses that accrue interest, the new account is expected to pay the government bonus as a lump sum only at the point of home purchase.

HM Treasury confirmed that current Lifetime ISA rules will remain in place indefinitely for both existing and new account holders until the transition to the new system occurs.