Martin Lewis has expressed his dissapointment that there were no changes to the Lifetime ISAs penalty for first time buyers buying homes over £450,000 in today’s Budget.
Mr Lewis posted on X that he was “dissapointed” that the Chancellor decided not to reform LISAs, despite previously asking the money saving expert to write to him about that very topic.
He said the Chancellor told him the reason he did not plan to tackle LISAs in the Budget is that he did not want to remove the penalty until he could see that “property prices are definitely rising” and that he planned “to reform LISAs” and not just “remove the penalty”.
The Martin Lewis Money Show host also posted that he was somewhat relieved that the topic was “at least not off the table”.
Chancellor Jeremy Hunt has announced several policy changes to the Government’s widely criticised Lifetime ISA during today’s Spring Budget.
Cash LISAs are Individual Savings Accounts designed to help people save for their first home or retirement faster. People can save up to £4,000 a year in a LISA, after which the Government will add a 25 percent bonus of up to £1,000 to the savings.
Prior to today’s announcement, savers had to follow much stricter guidelines to receive the Government bonus and avoid a penalty.
For example, withdrawals could only be made to purchase a qualifying first house up to the value of £450,000, or for retirement after the age of 60. Otherwise, a 25 percent Government penalty is applied.
The move follows an open letter from Money Saving Expert founder Martin Lewis in January with several proposed rule changes to consider.
In Mr Lewis’s open letter, he requested the Chancellor “index-link the £450,000 limit to house prices (backdated to 2018) and to reduce the withdrawal penalty for those buying a first-time property above the limit to 20 percent”.
The withdrawal penalty reduction would mean savers “would at least get back what they put in”.
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