The Lifetime Isa debate - what's it all about?

The Lifetime Isa debate - what's it all about?

We're talking about the Lifetime Individual Savings Account (Lisa), which is designed for buying your first home or saving for later life.

Depending what you read or who you listen to, the Lisa is the "next mis-selling scandal" and "already dead"... or "helping first-time buyers get on the housing ladder" and "a better deal for homebuyers than the Help to Buy Isa". 

For a potted history of the Lisa debate, read on. Or try our two-minute guide to the Lisa, including a summary of the benefits, elsewhere on MoneyLens: Should I bother with a Lisa? 

If you're totally lost in the Isa maze, here's your starting point - our quick guide to the different sorts of Isas, or Individual Savings Accounts.

Piggy bank

How did the Lisa come about?

The Lifetime Isa, or Lisa, was a project of former Chancellor George Osborne to help people buy their first home or save for later life. He unveiled the new Isa for 18-40 year-old savers in the March 2016 Budget.

Despite a change of Chancellor, the Lisa launched in April last year. 

It is available as a cash or stocks and shares Isa. For each £4,000 contributed, the government tops up with £1,000 - a 25% bonus. 

The cash Lisa can be used towards a property worth up to £450,000 if you're a first-time buyer. You pay a penalty if you take money out for anything else. 

How many have signed up for a Lisa?

Figures from HMRC (HM Revenue & Customs) have revealed it has missed sales targets. 

Official data on take-up has shown only 166,000 Lifetime Isa accounts were opened in the first year, 34,000 below government projections. 

Average deposits are below government projections too, at £3,114 rather than the £3,500 predicted. 

Who wants to scrap the Lisa and why?

Last month a group of MPs called for the Lifetime Isa to be scrapped - due to its "perverse incentives and complexity" and "its apparent lack of popularity with with the industry and pension savers"

It has been argued it could discourage people from saving into a workplace pension, which benefits from employer contributions.

A report from the Treasury Select Committee said people's finances are under pressure from weak income growth, the growth of the gig economy and self-employment and an ageing population.

It said: "There is little evidence that tax relief is an effective way of encouraging potentially vulnerable households to save for a rainy day".

The Treasury Select Committee committee highlighted a review which found 12 million people in the UK are not saving enough for their retirement, which it described as a “looming crisis”.

On August 23 Nottingham Building Society became only the second (after Skipton Building Society) to launch a Lifetime Isa in cash (rather than the stock market).

Who's in favour of the Lisa today?

Journalist Holly Black said in this MorningStar article: "My view of the Lifetime Isa is simple: savers who don’t take advantage are looking a gift horse in the mouth. I feel the same way about these lucrative savings accounts as I do about workplace pensions: it’s free money, why wouldn’t you take it?"

Andrew Hagger, personal finance expert at, said: "The lifetime Isa remains a no-brainer for many first-time buyers".

Martin Lewis, founder of, said in this piece: "The Treasury Committee seems to have concentrated on Lifetime Isas as an alternative to pensions – and in that context there is a strong argument for scrapping them...

"Yet for first-time buyers Lisas are a powerful option, with many being able to gain £1,000s of extra deposit, easing their ability to pay, and cutting their interest rates afterwards".

He added that "cutting Lisas would be a hard blow for many young diligent savers".


The views and opinions we have summarised are those of the individuals they have been attributed to. If you are unsure as to the suitability of your investment, please speak to a financial adviser.

Read more: Who's the best manager for my Isa - me or the experts?

Read more: Lost in the Isa maze? The five different sorts of Isa explained

Read more: Want to start investing into an Isa? These are the three questions you need to ask yourself

Read more: I want to invest in the property market but can't afford buy-to-let: how do I do it?


Lost in the Isa maze? The five different sorts of Isa explained

Lost in the Isa maze? The five different sorts of Isa explained

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