Your Lifetime ISA just got an upgrade

Good news for your Lifetime ISA. From 29 October 2026, you can use your Lifetime ISA to buy a first home for more than £450,000, and everything you pay in will be protected, plus most of the interest you've earned.

It's a change Moneybox has campaigned for, and it gives you more choice over the home you buy. Is it time to give your savings a boost?

What's changed

Until now, if your first home cost more than £450,000, using your Lifetime ISA meant a 25% withdrawal charge. That could mean getting back less than you paid in.

From 29 October 2026, that charge is reduced to 20% for a qualifying first home above £450,000. For a Cash Lifetime ISA, that means you'll get back everything you paid in, plus most of the interest you've earned. For a Stocks & Shares Lifetime ISA, you'll only give back the government bonus, not your own savings, though the value of your investments can go up and down.

Buy a first home for £450,000 or less, and you still keep your full 25% bonus.

Brian Byrnes, Director of Personal Finance at Moneybox, said: "Having long campaigned on behalf of the UK's largest community of aspiring first-time buyers, today's announcement that the LISA's withdrawal penalty will be reduced from 25% to 20% for those purchasing a property over £450,000 limit is a huge win for LISA savers, particularly those in London and the South East where property prices are notoriously high."

Your bonus is still waiting for you

Your Lifetime ISA is still yours to use, and the government will still add 25% to everything you pay in, up to £1,000 each tax year.

There's still time to earn more of this tax year's bonus before 5 April 2027. Even a small top-up earns a bonus. For every £4 you add, the government adds £1.

Setting up a regular deposit is an easy way to keep building your savings without having to think about it. Govt withdrawal charge may apply. ISA and tax rules apply.

Your Lifetime ISA isn't going anywhere

The Budget confirmed that a new First-Time Buyer ISA will launch in April 2029, and the Lifetime ISA will close to new savers from then. Because you already have a Lifetime ISA, you can keep paying in and using it under the current rules.

Your Lifetime ISA also gives you something the new account won't: the option to use your savings for retirement from age 60, if your plans change.

More support for first-time buyers

The Budget also confirmed details of the Your First Home scheme. It will help around 70,000 households in England buy their first home with a deposit of at least 2.5%, backed by a government equity loan worth 20% of the property's value. It will be open to first-time buyers with combined incomes of up to £110,000 outside London and £140,000 in the capital, and pre-registration opens by the end of December 2026.

The reduced charge is designed to protect your original contributions, assuming the account value has not fallen. The charge also applies to interest or investment growth.