Source · Select Committees · Treasury Committee
8th Report - Lifetime Individual Savings Account
Treasury Committee
HC 607
Published 30 June 2025
Recommendations
5
Accepted
Analyse Lifetime ISA effectiveness to support first-time buyers before increasing the house price cap.
Recommendation
The house price cap for the Lifetime ISA ensures that Government spending supports those who need financial assistance the most. Any increase in the price cap is an increase in Government spending. Before considering any increase in the house price …
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Government Response Summary
The government defends the current Lifetime ISA property price cap as well-targeted for first-time buyers and states that its comprehensive data collection and research continuously inform policy decisions, thereby inherently analysing effectiveness.
HM Treasury
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10
Accepted
Consider if Lifetime ISA spending effectively achieves government policy objectives.
Recommendation
Given the scale of demand on the public finances, the Government must carefully consider whether significant spending on the Lifetime ISA is the best way of achieving its policy objectives. (Conclusion, Paragraph 92)
Government Response Summary
The government defends the Lifetime ISA's role in encouraging saving and supporting first-time buyers, citing its impact, and states that existing data collection and research continuously inform policy decisions and that the policy is under review.
HM Treasury
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12
Accepted
Use income distribution impact assessments to evaluate Lifetime ISA's effectiveness for those needing financial support.
Recommendation
The Treasury must use income distribution impact assessments to assess whether the Lifetime ISA effectively targets people who need financial support. If the Lifetime ISA does not achieve that objective, the Treasury should consider whether the LISA has a future …
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Government Response Summary
The government asserts that the Lifetime ISA is well-targeted by design, referencing the property price cap and withdrawal charge, and states that its comprehensive data collection and qualitative research already inform policy decisions regarding its effectiveness.
HM Treasury
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Conclusions (3)
4
Conclusion
Accepted
Many people have lost a portion of their savings due to a lack of understanding of the withdrawal charge or because of unforeseen changes in their circumstances, such as buying a first home at a price greater than the cap. However, the case for reducing the charge must be balanced …
Government Response Summary
The government committed to considering the recommendation in future policy development and specifically to working with industry and other government departments to improve messaging about the implications of savings and investments for Universal Credit entitlement.
6
Conclusion
Accepted
It is difficult for the Committee, the Treasury and the FCA to determine how the Lifetime ISA is being used for retirement saving across the eligible population without additional data. The Lifetime ISA may not have been in existence for sufficient time to support firm conclusions on its suitability as …
Government Response Summary
The government states it already collects comprehensive data on LISAs, including published statistics and qualitative research, and has shared further data with the committee, which informs policy decisions and continuous review of the Lifetime ISA.
11
Conclusion
Accepted
Data concerning Lifetime ISA use by its target market is mixed and inconclusive. We are concerned that Lifetime ISA bonuses may involve significant spending of taxpayers’ money in a way that may not be precisely targeted. Without better quality data on Lifetime ISA holders, it is difficult to estimate the …
Government Response Summary
The government states it already collects comprehensive data on LISAs, including published statistics and qualitative research, and has shared further data with the committee, which informs policy decisions and continuous review of the Lifetime ISA.