The Lifetime ISA just got an upgrade

Not sure if the Lifetime ISA is for you? Recent changes mean saving for a home just got easier, no matter your budget.

From 29 October 2026, you can use a 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 means more people can save for their first home with confidence.

What is a Lifetime ISA?

A Lifetime ISA is a tax-free account that helps you save for your first home or your retirement, with a boost from the government.

You can open one if you're aged 18 to 39, and pay in up to £4,000 each tax year. The government adds a 25% bonus on top of what you pay in, worth up to £1,000 a year. For every £4 you put in, you get £1 extra.

You can use your savings, and your bonus, towards your first home costing £450,000 or less, once your account has been open for 12 months. Or you can keep it for retirement and access it from age 60. Plans change, so a Lifetime ISA keeps your options open.

What's changed

Until now, if your first home cost more than £450,000, you'd have paid a 25% withdrawal charge to use your savings. 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.

Open yours before April 2029

The government has confirmed that the Lifetime ISA will close to new savers in April 2029, when a new First-Time Buyer ISA launches. If you open a Lifetime ISA before then, you can keep paying in and using it under the current rules.

Brian Byrnes, Director of Personal Finance at Moneybox, said: "The first-time buyer ISA will not be introduced until April 2029, so aspiring homeowners that want to buy within the next three years won't have the opportunity to use it and would miss out on the benefits of a LISA in the meantime."

Opening sooner also gives you more tax years to earn your bonus, and more time for your savings to grow. Govt withdrawal charge may apply. ISA and tax rules apply.

More support for first-time buyers

The Budget also confirmed more details on two other schemes for first-time buyers.

The First-Time Buyer ISA will launch in April 2029. You'll be able to pay in up to £4,000 a year and get a 25% government bonus, paid when you withdraw to buy a first home worth up to £450,000. Unlike the Lifetime ISA, it's designed for home buying only, so it can't be used to save for retirement.

The Your First Home scheme 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. 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.