Source · Select Committees · Treasury Committee
Recommendation 3
3
Deferred
Increasing Lifetime ISA unauthorised withdrawals and charges suggest the product is not working as intended.
Conclusion
An increasing number of people are making unauthorised withdrawals and incurring the withdrawal charge, which may indicate that the Lifetime ISA is not working as intended. (Conclusion, Paragraph 33)
Government Response Summary
The government explained how Lifetime ISAs are factored into Universal Credit calculations and justified the existing capital limits, rather than directly addressing why increasing unauthorised withdrawals suggest the LISA is not working as intended.
Government Response
Deferred
HM Government
Deferred
The Lifetime ISA is a savings product. As with other savings and investments products it counts towards calculation of UC. In calculating entitlement to UC it is the realisable value of the Lifetime ISA which is used (i.e. after deduction of the withdrawal charge) not the amount held in the account. Households will be ineligible for Universal Credit if they have capital over £16,000. In such cases, it is likely that they have alternative means of financial support, so this limit ensures that help which comes from taxpayers, many of whom have limited capital, is directed to families who need it most. Universal Credit is there to support people who do not have sufficient resources available to meet their basic needs. While it is important to protect the incentive to save for customers on low earnings, people with substantial capital should take responsibility for their own day-to day support.