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Lifetime ISAs: Why they divide opinion

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Kevin Peachey

Cost of living correspondent

Getty Images Man and woman look at laptop in a living room surrounded by cardboard boxes. The woman is sitting on a dining chair, the man is standing behind her, leaning on the back of her chair, the laptop is on top of a big cardboard box.Getty Images

Liam Roberts had only just finished university, but he was already thinking ahead to how to buy a home and fund retirement.

In 2018, he was looking for a way to build up some savings, and so he chose a Lifetime ISA (LISA).

Anyone under 40 can open a LISA to either help save towards retirement or buy a first home. Savers can put in up to £4,000 a year and the government will top it up by 25%.

“It is an excellent product,” says Liam, now aged 28. “The government paid £4,000 towards my first home.”

Liam Roberts Liam Roberts headshotLiam Roberts

Liam is delighted with his Lifetime ISA

He bought a two-bedroom home in Manchester in 2022, using the cash savings and government bonus to help pay the mortgage deposit.

That LISA was automatically closed, and so, after getting his job as an asset manager, he opened another one.

This time it was a stocks and shares LISA, for even longer-term retirement plans. Again, he puts in the maximum £4,000 a year, and gets the 25% government bonus. He can start making withdrawals, without a penalty, from the age of 60.

“They are designed for long-term planning,” he says.

In a job that involves reading financial products, he knew what he was signing up for, and that it would work well for his circumstances.

Not everyone has the same knowledge, though, or the same opportunity to make the most of the benefits of the LISA. There remains a limited number of providers, with High Street banks and building societies not among them.

The influential Treasury Committee of MPs has said the LISA is ripe for reform, as the commitment of taxpayer funds is involved.

Many of you have got in touch via Your Voice, Your BBC to express your dismay about the product’s pitfalls.

At the heart of these concerns are two issues:

  • the penalty involved in withdrawing money early, which means people face losing 6.25% of their own savings
  • the cut-off which means LISA savings can only be used when purchasing a property up to a value of £450,000 – a threshold that has been unchanged since LISAs were launched in 2017, despite rising house prices particularly in south-east England

Those who have been in touch have hit out at the penalty, particularly after being caught out by the £450,000 limit.

‘Upset and annoyed’

One of those was Holly from London. The 28-year-old says she lost around £750 when she bought her home in 2023.

“I was very upset because I’d been using it to save for a house since I was 19 and I did actually use the money to buy my first home as the scheme intended.”

She says at 19 the chances of buying a house over £450,000 felt very remote but then her career was going well and she met her future husband.

“What annoys me is that I bought the home with my now husband and my share is well under £450,000 but of course that wasn’t taken into account,” she says.

Lucy Slavin Lucy and Daniel Slavin stand with woodland seen behind them. Lucy is carrying their young baby in a baby carrier on her chest.Lucy Slavin

Lucy and Daniel Slavin say the rules around LISAs need to change

Daniel Slavin set up a LISA in his 20s. At the time, as a single person, he understood why the thresholds were there and thought it was a good product.

But fast-forward a few years, and now married, when it came to buying a house, he and his wife Lucy fell foul of the £450,000 limit.

While they were still able to buy without needing to use their LISA, Lucy says it put them in a difficult financial position.

“It is incredibly frustrating knowing that if we need to withdraw the money our only option is to lose part of our savings,” says the 32-year-old, who works as a research specialist for a charity.

“I can understand losing the bonus if you withdraw early but the penalties are awful.”

Daniel, 33, who’s a doctor, has since stopped paying into his LISA.

“The current government wants us to buy houses and increase growth and I don’t think they should penalise us for doing the right thing and saving money,” he says.

They need to take inflation into account, he says. “They should change the rules.”

Barrier to new savers

Commentators and campaigners are keen to see changes.

Martin Lewis, founder of MoneySavingExpert, says the £450,000 threshold is “unjust, unfair and the rules need changing”.

“If a LISA is used to buy a property above the threshold, there should be no fine, they should get back at least what they put in,” he said.

“And this flaw doesn’t just hurt those with LISAs. It puts off many young people, especially from lower income backgrounds, who tend to be more risk averse, from opening LISAs in the first place.”

Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, says that LISAs had proven popular among the self-employed, who can save for retirement despite not having access to a workplace pension.

However, she called for the penalty for early withdrawal to be eased, and the age limit for opening a LISA to be extended.

Savings habit

LISAs were launched under the then-Conservative government in April 2017.

Since then, 6% of eligible adults have opened one, with about 1.3 million accounts still open, according to the most recent figures.

Opinions are clearly divided among those account holders about how well they work.

The government says the LISA is a source of celebration but, in time, it could well address some of their concerns.

“Lifetime ISAs aim to encourage younger people to develop the habit of saving for the longer term, helping them to purchase their first home or build a nest egg for when they are older,” a Treasury spokesperson said.

“We welcome the committee’s report and will now review its findings and respond in due course.”

Additional reporting by Alex Emery, Kris Bramwell and Shanaz Musafer



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Edinburgh Airport liquid limit increased from 100ml to two litres

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Claire Thomson

BBC Scotland News

BBC An orange airport video signboard saying "Liquids of up to 2 litres now allowed" with passengers carrying hand luggage walking in backgroundBBC

There is no limit on the number of two litre containers in hand luggage

Edinburgh Airport has lifted the 100ml rule for liquids being carried in hand luggage.

It will now be possible to take containers of up to two litres through security, and they will not need to be removed from bags.

The change comes after an extra two lanes and eight scanners costing £24m were installed at the international hub.

Edinburgh Airport is the first airport in Scotland to lift the rule. Birmingham airport has also lifted the rule.

There will be no limit on the number of containers that passengers can carry in their hand luggage, but metal water bottles will need to be emptied beforehand.

Items such as bottles of wine or large water bottles can also be taken on in cabin bags.

Smiths Detection A Smiths Detection airport security scanner with a blue suitcase in a tray on the conveyor belt. Smiths Detection

Eight scanners costing £24m have been installed at the international hub

Passengers using the airport are also able to keep large electricals, such as iPads, tablets and laptops, in their hand luggage.

Gordon Dewar, chief executive of Edinburgh Airport, said it would allow passengers to move through security more easily than they currently do.

But he said passengers should check security rules at their return destination as other airports may not have moved away from the 100ml limit.

“A whole generation of travellers have only known the 100ml rule to be the case, so it really is a momentous day as we become the first airport in Scotland to lift the rule since it was introduced in 2006,” he said.

“The change allows more flexibility for passengers to take liquids through security, all while maintaining and improving our high safety levels through the use of 3D technology.”

What are the rules at Scotland’s airports?

Passengers at Glasgow and Aberdeen airports can leave liquids and electronics items, such as laptops and tablets, in cabin bags while going through security.

Liquids, which include creams, gels, pastes, sprays and aerosols, can be taken through in containers of up to 100ml in volume without using a plastic bag.

There is no limit on how many 100ml items passengers can bring.

At Inverness and Glasgow Prestwick airports, liquids, laptops and other electronic devices, including hairdryers, cameras and straighteners, must be removed from cabin bags and placed in a tray.

Liquids in a container of 100ml or less should be placed in a sealed 20cm x 20cm, one litre plastic bag.

Each passenger can only take one of these bags.



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