UK consults on First Time Buyer ISA replacing Lifetime ISA

The UK government has launched a consultation on plans to replace the Lifetime ISA with a new First Time Buyer ISA, a product designed exclusively to help people save for a deposit on their first home. The proposed changes, announced in a Treasury document published on Tuesday, June 23, 2026, would remove the controversial withdrawal penalty and eliminate the upper age limit for opening an account.

The new FTB ISA would mark a significant shift from the current Lifetime ISA, which was launched in 2017 to support both first-time home purchases and retirement savings. Under the proposed framework, the government's 25% bonus would no longer be added to the account monthly. Instead, it would be paid as a lump sum only when the funds are withdrawn to complete the purchase of a first home, calculated solely on the amount the saver contributed. Officials said this change removes the need for a withdrawal charge, allowing savers to access their own contributions without penalty if their circumstances change.

A key feature of the new product is the removal of the upper age limit. Currently, a Lifetime ISA can only be opened by someone aged 18 to 39. The Treasury stated that the reform...