Select committee: Treasury Committee
Conclusion 7
8th Report - Lifetime Individual Savings Account
Published 30 Jun 2025
Addressed to HM Treasury
Treasury Committee Lifetime ISA All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
We recognise the risks for certain individuals opting to save for retirement in a Lifetime ISA instead of a workplace pension, because of lower tax relief for higher- and additional-rate taxpayers and forgoing employer contributions. Although we recognise that it can be a valuable complementary saving product for many, such as the self-employed and all basic rate taxpayers, the Lifetime ISA may not be a suitable retirement saving vehicle for additional rate taxpayers. Given that HMRC’s 2024 to 2025 projections are that of 37.4 million taxpayers, 29.5 million will be paying the basic rate, the Lifetime ISA could provide a very useful and superior third pillar for basic rate and self-employed taxpayers. (Conclusion, Paragraph 81)
From: Treasury Committee, 8th Report - Lifetime Individual Savings Account (HC 607), 30 June 2025
Government response
The government responded to the whole report on 11 September 2025 (deadline 30 August 2025).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government's response does not commit to changing the Lifetime ISA, saying it "will consider" the Committee's recommendation in future policy development and "keeps all aspects of the Lifetime ISA policy under review".
- On messaging, the government says it has "no direct contact or interaction with individuals" but "will work with industry to consider ways in which it could improve its messaging", with no date given.
- On targeting, it points to the £450,000 property price cap and the withdrawal charge as ensuring the product is well targeted, and cites 227,600 first-time buyers helped since 2017. It does not commit to a future review of the product's form.
- On Universal Credit, it describes the Lifetime ISA as "a savings product" that counts towards the calculation like other savings, using its realisable value after the withdrawal charge. It sets out reasons for the £16,000 capital limit and does not say it will change the treatment.
- On warnings about Universal Credit, it says it "will consider the recommendation in the future development of the policy", points to MaPS guidance, and "will work with industry and other Government Departments to consider ways to improve the messaging".