First-time buyer boost as hated savings penalty set to be removed: Money LIVE

First-time buyers have been given a major savings boost after it was reported that the Lifetime ISA penalty charge will be removed.

A new version of the Lifetime ISA will reportedly launch in April 2028. You can currently use a Lifetime ISA for your first home or retirement.

It is a savings product that allows you to put away up to £4,000 every tax year and in return, you get a free 25% bonus from the Government. This means you can get up to £1,000 free every tax year.

You currently face a withdrawal penalty if you use your Lifetime ISA savings for any reason other than buying your first home or retirement. This not only wipes out the bonus, but also part of your original savings.

But the new Lifetime ISA will reportedly remove this withdrawal penalty. The property you’re buying with your Lifetime ISA can’t be worth more than £450,000 under the existing model.

This limit has been in place since the Lifetime ISA was launched in 2017 and campaigners have been calling for it to be increased, to keep up with rising house prices.

There is no word yet on whether it will be raised in the new model. It has also been reported that the retirement element of the Lifetime ISA will be removed in 2028.

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