Your Lifetime ISA just got an upgrade

You've been building your savings with your Lifetime ISA, and now it gives you even more choice. 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 means the savings you've worked hard for can go further.

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: "We are thrilled about this decision and it is a massive victory for first-time buyers, particularly in high-cost regions like London and the South East where rising property prices have left many facing unfair penalties."

Make the most of this tax year's bonus

Every deposit you make earns a 25% government bonus, up to £1,000 each tax year. If you haven't reached your £4,000 limit yet, there's still time to top up before 5 April 2027 and earn more of this year's bonus.

Is it time to give your savings a boost? Govt withdrawal charge may apply. ISA and tax rules apply.

Keep saving, whatever comes next

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.