LISA0004

Written evidence submitted by Anonymous

Although I am a user of the Lifetime ISA (LISA) I think it can probably be scrapped.

I think its dual role as a savings vehicle for house purchase and retirement is somewhat confusing to people which may have limited its uptake, though I have no evidence of this.

Further, the issue of housing affordability will only ever be exacerbated by injecting government money into the housing market so this product is fundamentally detrimental to the core issue.

As a result I think its role as a house purchase savings vehicle can definitely be scrapped.

In its role as a retirement savings vehicle it can still be useful.

Although it is inferior to an actual pension scheme on most, if not all, financial measures the ability to withdraw money without incurring the 55% tax charge on an unauthorised pension withdrawal should attract those who cannot afford to put their savings effectively beyond reach.

I think the charge on withdrawal is acceptable to ensure it remains a long term savings vehicle and not an easy access product.

I am higher rate tax payer and am fortunate enough to have a reasonably well funded pension and enough free cash that I can put the full £4k in each year and get an additional £1k from the government to put in the stockmarket and leave until I’m 60. I imagine a significant proportion of current LISA users are in a similar position and I don’t think I should really have access to this so I am not against limiting access based on some simple measures like applicant must be employed, paid through PAYE, and not in the higher or additional rate tax bands.

If access were limited then I think the bonus could be boosted significantly so the government bonus matches the customer deposit provided it comes with a similar change in the early withdrawal charge to avoid gaming it for ‘free money’ today.

January 2025