Can the LISA fill the Help to Buy ISA gap?

The Government has confirmed it will go ahead with plans to stop accepting new applications for the Help to Buy ISA from the 30th of November.

The Lifetime ISA account was announced by the Government in 2017 for those aged 18-39, who are either saving for their first home or retirement and later life (post-60). Account holders are able to save up to £4,000 tax-free every year, with a 25% state bonus being paid annually until the account holder turns 50, when they will no longer be able to make deposits.

Jenna McKenzie Day, senior savings manager at The Nottingham, commented: “We’re not surprised by the statistics because we know LISA is a genuinely beneficial account that in many cases is helping people buy their first home sooner. A large majority of those opening a LISA with The Nottingham are first-time buyers planning to use the funds for their first home. That means potential bonuses of up to £1,000 a year are available for every £4,000 saved.

“The UK is waking up to these benefits and with the Government still planning to pull the Help-to-Buy ISA in November this year, this will only gain momentum. Since the start of the year, we have seen over seven times as many Lifetime ISAs opened compared to the Help to Buy ISA, so it’s clear that the LISA is primed to fill the gap that Help to Buy will leave when it stops in November."