What changed for Lifetime ISAs?
The Budget keeps the £450,000 whole-home cap. From 29 October 2026, a withdrawal used for a purchase above that cap which otherwise meets the qualifying rules will have a 20% charge. Other unauthorised withdrawals remain at 25%. Confirm the process and timing with your provider and conveyancer.
The technical Budget and HMRC documents specify 29 October. The Treasury news summary uses “from today”; this page follows the specific technical date.
The current LISA saving and purchase rules
Eligible savers can contribute up to £4,000 each tax year and receive a 25% bonus, up to £1,000 a year, within the overall ISA allowance. Open at age 18-39 and make the first payment before 40; contributions and bonuses stop at 50. Residency conditions apply.
A charge-free first-home withdrawal needs a whole-home price of £450,000 or less, at least 12 months since the first payment, first-time-buyer status, a qualifying mortgage and conveyancer withdrawal. Each joint buyer must qualify separately. Do not divide the property cap between buyers or use only a shared-ownership share price.
20% and 25% are different charges
| Withdrawal | Charge | Left |
|---|---|---|
| Above-cap purchase, otherwise qualifying, from 29 October 2026 | £1,000 (20%) | £4,000 |
| Other unauthorised withdrawal | £1,250 charge (25%) | £3,750 |
Investment losses can reduce the balance. Age 60 and qualifying terminal illness have separate withdrawal rules. A higher property cap under another scheme does not make a LISA withdrawal charge-free.
Keep three pots separate
Deposit money, accessible buying-cost cash and a reserve after moving have different jobs. The planner only counts confirmed eligible LISA money towards the deposit; it does not automatically turn it into cash for costs.
The catches
Help to Buy ISA vs Lifetime ISA
Help to Buy ISAs are closed to new applicants. Existing savers can contribute up to £200 a month; maximum bonus £3,000. The home cap is £250,000 outside London or £450,000 in London. One person cannot use both its bonus and a current LISA bonus for the same purchase.
A 5% deposit on £180,000 is £9,000, before buying costs and a reserve. The Help to Buy ISA bonus must be claimed before completion and cannot be used for the deposit due at exchange. Discuss this early with the conveyancer.
The new First Time Buyer ISA is planned for April 2029. It is a future product with different bonus timing. Existing LISAs continue; do not transfer or close anything without checking the actual terms.
Questions you might be asking
Did the Budget raise the Lifetime ISA property cap?
No, the whole-property cap remains £450,000. From 29 October 2026, withdrawals for a purchase above that cap which otherwise meets the qualifying rules have a 20% charge. Other unauthorised withdrawals retain the 25% charge.
Does the withdrawal charge only remove the bonus?
A 25% charge can take some of your original savings. With no investment change, £4,000 plus a £1,000 bonus becomes £3,750 after that charge. The new 20% over-cap purchase charge would leave £4,000 from the same £5,000 balance.
Can I use Help to Buy ISA and Lifetime ISA bonuses together?
One person cannot use both current bonuses for the same home purchase. A Help to Buy ISA bonus must be claimed before completion and cannot fund the deposit due at exchange.
Can I use my Lifetime ISA on any house?
No. The whole-home cap and the ownership, account timing, mortgage and conveyancer conditions all matter; the reduced above-cap charge is not a charge-free withdrawal.
Can both buyers use their own LISA?
Yes, if each separately meets the rules. The £450,000 charge-free cap applies to the whole property, rather than to each buyer.
Is the new First Time Buyer ISA open now?
No, the Budget plans it for April 2029, while existing LISAs continue. Do not close or transfer an account just because a future product has been announced.
Sources
Original information checked 28 October 2026. Lender criteria and government plans can change.
What to do next
Start with what you can afford each month, then check the cash and conditions for the route you are considering. Download the questions checklist.
Build my starting budget →Get Your First Home updates and opening-date reminders →Optional emails from Lynton Mortgages. Separate from government pre-registration.