LISA0119

Written evidence submitted by Anonymous

I am a 24-year-old living in London and my father set up a LISA for me at the age of 18 which I was very grateful for. Most years I have contributed 100% of my £4k allowance, until recently.  

The LISA no longer serves its purpose and the £72 million that HMRC has made in withdrawal penalties, shows this.

It seems unfathomable that the house price limit has not moved since it was introduced in 2016, with rising inflation and interest rates, the new limit should be around a £650k.

Living in London as a young professional with a decent salary, it becomes very clear this is not fit for purpose and it should have been disclosed at the beginning who this product was actually designed for. Furthermore, properties under the £450k price tag are not appropriate for london or anywhere for that matter.

What plays on my mind is either I don’t buy a property and get on the ladder as this product suggested it would help me do, or I waste my time, money and effort on withdrawing my funds to purchase a house outside of this product.

The latter being a product of the ridiculous 25% withdrawal fee which depletes our own ingoing’s by 6.25%. I believe this should be removed or at least reduced. At most, we should only have to return back the bonus’ we receive each year, keeping any profits as we were enticed into a product at a young age which is no longer suitable for most of the customers using this product.

Using this as a retirement fund, is no longer suitable either. What good is that when most young professionals who would be being a house have a workplace pension which pays in even if we don’t! Unlike the LISA, once again highlighting the flaws of this product.

Outside of this matter, this product has been misleading from the start. How can the government introduce a product and seem to forget about it? Nothing has been amended on this scheme apart from the covid relief in nearly 10 years. What if we were to forget about increasing the minimum wage for 10 years?

For the 100,000 people that have already had to make withdrawals, the penalty is too high. HMRC are making profits off a product which was designed to help young people make a life for themselves.

January 2025