Is the lifetime Isa no longer fit for purpose?
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Martin Lewis says the saving scheme proved a big hit but is starting to penalise the very people it sought to help. It appears to be proving a hit with millennials and generation Z but has also come under fire for the “unfair” sting in its tail. The lifetime Isa is a scheme that helps people save towards their first home or for their retirement – its big selling point is the free cash you get from the government: up to £32,000 in theory.
![[Rupert Jones]](https://i.guim.co.uk/img/uploads/2022/08/30/Rupert_Jones.png?width=75&dpr=1&s=none&crop=none)
But the way the scheme works penalises some people, and the consumer champion Martin Lewis is among those who have called for an urgent revamp. Now an influential committee of MPs has stepped into the debate. This week the Commons Treasury select committee said it would be hoping to establish whether the lifetime Isa was still “fit for purpose” in 2025 and whether it needed an overhaul – or even to be abolished.
![[Martin Lewis]](https://i.guim.co.uk/img/media/06527f44eb8e900aec361abbfc3d71aa231f224a/0_64_4613_2768/master/4613.jpg?width=445&dpr=1&s=none&crop=none)
Lifetime Isas were unveiled in 2016 by the then chancellor, George Osborne, and went on sale the following year. You must be 18 or over and under 40 to open one. You can pay in up to £4,000 each year until you are 50 and the government will add a 25% bonus to your savings, up to a maximum of £1,000 a year.
![[A row of redbrick terrace houses on a slope]](https://i.guim.co.uk/img/media/ca62516fbb84cb418fda5cb6e47ab74186a63e55/1091_331_4381_2629/master/4381.jpg?width=445&dpr=1&s=none&crop=none)
The lure of free cash has proved attractive: official data shows that the number of “live” lifetime Isa accounts has jumped by almost 40% in two years, reaching 755,000 in 2022-23. To date, more than 227,000 people have used money saved in one to help buy their first home. In the 2023-24 tax year, the average sum withdrawn from one rose to £14,927.
