Source · Select Committees · Treasury Committee
Recommendation 7
7
Acknowledged
Lifetime ISA may not be suitable for additional rate taxpayers, despite benefits for others.
Conclusion
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)
Government Response Summary
The Government recognises the importance of the Lifetime ISA and is publishing two pieces of externally commissioned research on GOV.UK to further improve our understanding of how the LISA is used.
Government Response
Acknowledged
HM Government
Acknowledged
The Government recognises the importance of the Lifetime ISA in supporting people to achieve the aspiration of home ownership, or to build up savings for later life. To further improve our understanding of how the LISA is used, HMRC is today publishing two pieces of externally commissioned research, which can be found on GOV.UK.