Lifetime ISA changes and the new First Time Buyer ISA
4 min read · Updated 29 October 2026
Short answer
From 29 October 2026, if you use Lifetime ISA money to buy a first home above the £450,000 price cap, the withdrawal charge is 20% instead of 25%. From April 2029 a new First Time Buyer ISA replaces the Lifetime ISA for new savers, keeping the £4,000 yearly limit and 25% bonus, with no upper age limit. Existing Lifetime ISA holders can keep their accounts.
Buying above £450,000 with a Lifetime ISA
From 29 October 2026, Lifetime ISA funds can be withdrawn for first-home purchases above the £450,000 cap that otherwise qualify, with a reduced 20% withdrawal charge. That protects the value of your own contributions. Budget 2026
The usual 25% charge still applies to other unauthorised withdrawals.
The new First Time Buyer ISA (from April 2029)
Contributions up to £4,000 a year with a 25% government bonus, paid on the account balance when you withdraw for a qualifying first home up to £450,000.
It will have no upper age restriction. Existing Lifetime ISA holders can keep contributing under the current rules.
Should I wait?
If you're 18–39 and saving for a first home, you can still open a Lifetime ISA now. Waiting until 2029 means missing years of bonus.
Compare it with the Your First Home scheme and your timeline. This is general education, not personal advice.
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Questions
Questions people also ask
Is the Lifetime ISA being scrapped?
Not for existing holders. From April 2029 the new First Time Buyer ISA replaces it for new savers; existing accounts continue.
What is the Lifetime ISA withdrawal charge for homes over £450,000?
From 29 October 2026 it is 20% for qualifying first-home purchases above the cap, instead of 25%.
Can I still open a Lifetime ISA?
Yes, if you're aged 18 to 39, until the new First Time Buyer ISA replaces it for new savers.