The Chancellor, John Healey, has cut the Lifetime ISA withdrawal penalty from 25% to 20% for first-time buyers whose home costs more than the £450,000 price limit. He also confirmed in the Budget that a new First-Time Buyer ISA will replace the LISA for new savers.
Healey told the Commons that "if the home you want costs more than the limit, you will get back at least what you put in", Surrey Live reports. That holds up. Buyers above the limit lose the government bonus but get back their own savings.
The 25% charge still applies to other unauthorised withdrawals, according to MoneySavingExpert. Existing LISA accounts are not being closed, thinkmoney reports.
MoneySavingExpert reports that the First-Time Buyer ISA will go ahead from April 2029. It will have a £450,000 property price cap, and the bonus will be paid on the balance when funds are withdrawn for a first home. The £450,000 limit has been frozen since the LISA launched in 2017, the site says.
Martin Lewis, MoneySavingExpert founder, said he was "Delighted after years of fighting for it" and that "This will be a great relief to many young people".