Alex Sitaras, Head of Savings and Partnership Products
29 October 2026
Saving up to buy a first home is tough enough. So seeing headlines about the scrapping of Lifetime ISAs (LISAs) can be worrying if you're using one to build your deposit.
But don’t panic. This isn't a case of the rug being pulled from under you.
While it's true LISAs may not be around forever, the government has confirmed it will introduce a new First Time Buyer ISA in April 2029, which will replace the LISA for new savers. Until then, you can still open a LISA, and existing LISA holders will be able to continue saving into their accounts under the existing rules.
Let's take a look behind the headlines at what's changing, what isn't, and how a LISA could still help you save for your first home or retirement.
The value of a Lifetime ISA
It’s nearly a decade since the launch of LISAs. The aim has always been simple: help people save for two big life goals: buying their first home and retirement. And the figures show it’s working.
According to government statistics, 87,250 people withdrew from their LISA to buy a first home in the 2024/25 tax year – a 30,500 increase on the year before.
If you're wondering how a LISA works, here’s a quick recap of the current rules to help show why it's still such a popular option.
- You can save up to £4,000 each tax year. It forms part of your overall £20,000 annual ISA allowance.
- You can open a LISA between ages 18 and 39, and pay in until age 50. Each year you get a 25% government bonus on eligible contributions (until you turn 50), up to a maximum of £1,000 a year.
- You can withdraw from your LISA after 12 months from making your first payment, to buy your first home with a purchase price of up to £450,000.
- From 29 October 2026, if you use your LISA towards buying your first home for more than £450,000, and the purchase otherwise meets the qualifying rules, a 20% withdrawal charge will apply. This means you'll get back the amount you paid in, although you'll lose the government bonus.
- For any other withdrawals before the age of 60, a 25% government withdrawal charge usually applies. This means you’d get back less than you paid in.
Why are the government looking to replace the LISA?
The government says there’s evidence the LISA is “not working well for many”.
But here’s the important bit: they’re not moving away from the principle of supporting first-time buyers.
The government has confirmed the LISA will be replaced by a new First Time Buyer ISA for new savers from April 2029.
Based on the announcement, it will:
- focus solely on helping first-time buyers, with no retirement savings element
- provide a government bonus towards buying a first home, paid during the home buying process rather than into the account
- allow savers to withdraw their money without a penalty if their plans change.
But if you have a LISA already, the key question is what it means to you.
Can you keep using your existing LISA?
Yes, absolutely. You can keep using your account as you do today. That means saving up to £4,000 each tax year, and getting an annual bonus of 25% from the government.
When you’re ready to buy a first home, you can use your LISA in the same way.
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Top tip
We've put together helpful information on using your LISA for a first home or to fund your retirement to support you.
Can you still open a LISA?
Yes. You can still open a LISA under the current rules before the new First Time Buyer ISA launches in April 2029.
You only need £1 to open a Cash LISA. (That’s not a typo.)
So if you're considering saving for a first home or retirement in future, opening a Cash LISA now could keep that option open.
Can you have both a LISA and a First Time Buyer ISA when it's launched?
Yes. If you already have a LISA, you’ll be able to hold both a LISA and a First Time Buyer ISA.
There are some important caveats:
- You won’t be able to save into both the new First Time Buyer ISA and LISA in the same tax year, so you’d need to choose one.
- You can’t transfer your LISA savings into the First Time Buyer ISA.
The maximum amount you'll be able to pay into a First Time Buyer ISA is £4,000. But like with LISAs, it will form part of your overall annual ISA allowance.
What if you've already used your LISA savings to buy a first home?
Until you turn 50, you can continue saving into the account as normal, subject to the usual annual limits. You'll continue to receive the government bonus on eligible contributions, and you can access your savings without incurring the government withdrawal charge from age 60.
Support for first-time buyers
We offer a range of first-time buyer mortgage options designed to support modern affordability challenges. Like using your rental history or the support of friends and family to boost your borrowing power.
If you don't keep up with your mortgage payments, you could lose your home.
Members get more
If you have a Skipton LISA, you’re a member. That means you could benefit from member-only rewards such as:
- £250 cashback if you use your Skipton LISA to help buy a first home and take out a Skipton mortgage (if your mortgage completes by 30 June 2027)
- one free Move iQ Property Report, powered by Phil Spencer's Move iQ^.
Terms apply to these offers. Find out more by visiting our member benefits page.
^The Property Report is not regulated by the FCA.
