'More must be done' to reform Lifetime ISAs

12 Sep 2025

The Treasury Committee has stated that the government has 'not heeded warnings' that the Lifetime ISA requires reform.

In a new report, the Committee revealed it is unconvinced that the Lifetime ISA effectively targets people in genuine need of financial support.

MPs warned that the Lifetime ISA's dual-purpose design may be diverting people away from more suitable products and putting part of their savings at risk.

Commenting on the issue, Dame Meg Hillier said: 'The government has taken some steps towards improving the Lifetime ISA, but I do not believe they have gone far enough. The Lifetime ISA is a confused product that requires reform.

'Recently published research by HMRC based on a sample of Lifetime ISA holders found that 87% of those who had used their Lifetime ISA to buy their first home said that they could have done so without their Lifetime ISA. Given that the Lifetime ISA is forecast to cost the government £3 billion over the next five years, this raises the question whether the Lifetime ISA is a good use of taxpayers' money.'