Money saving expert Martin Lewis has directly questioned Chancellor Rachel Reeves over mounting anxieties surrounding the future of the Lifetime ISA (LISA). The intervention came during a discussion following the Autumn Budget, where Reeves confirmed an upcoming consultation on the savings product.
What is the Lifetime ISA and why are people worried?
The Lifetime ISA is a popular government-backed savings scheme designed to help people buy their first home or save for retirement. Savers can deposit up to £4,000 each year, receiving a 25% government bonus – equating to a maximum £1,000 annual top-up.
However, the scheme has a significant restriction: it can only be used for a first-time property purchase if the home costs £450,000 or less. Martin Lewis has long campaigned for this price cap to be increased, arguing it is outdated and traps savers, particularly in areas with higher property prices.
During the ITV show, Lewis relayed a viewer's urgent plea: "Could you ask the Chancellor why they can't change the £450,000 cap on lifetime ISAs before the consultation? So many are stuck and can't wait for a consultation."
Chancellor's response and the promise of a 'better product'
In response, Chancellor Rachel Reeves emphasised the need for a thorough review. "The consultation is getting up and running. We want to get this right," she stated. "We're going to introduce a new product, a better product. This is the system we inherited."
Pressed by Lewis on whether current LISA holders should withdraw their funds due to the uncertainty, Reeves offered reassurance. "I would encourage people, if you've got money in a LISA at the moment, nothing is changing," she said. She confirmed the consultation would examine the property price limit and consider the position of existing savers.
Key questions for the LISA consultation
The exchange highlighted critical questions that the government's consultation must address. Lewis specifically asked if existing LISA pots could be transferred or 'ported' into any new scheme that is developed.
Reeves did not give a definitive answer, instead urging public participation: "That's why we're having a consultation, to answer these questions. I really encourage you and all your viewers who've got views on this to feed into that consultation so we get it right."
The Chancellor's comments indicate that while changes are anticipated, the government is committed to a reform process that could reshape this key savings vehicle for first-time buyers and retirees.
