Source · Select Committees · Treasury Committee
Recommendation 13
13
Not Addressed
Inconsistency identified in Lifetime ISA treatment within Universal Credit eligibility assessments.
Conclusion
The Government’s argument that the LISA should be included within a Universal Credit eligibility assessment because the Government has contributed to the balance within the LISA is inconsistent. The Government provides higher levels of contribution through tax relief to many other pension products that are not included in the Universal Credit eligibility assessment, such as workplace pensions and SIPPs. Treating one retirement product differently from others in that regard is nonsensical. (Conclusion, Paragraph 105)
Government Response Summary
The government reiterates that the Lifetime ISA is treated as a savings product for Universal Credit purposes and explains its capital limit policy, but does not directly address the committee's specific criticism about the inconsistency of treatment compared to other pension products.
Government Response
Not Addressed
HM Government
Not Addressed
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.