Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he has made an assessment of the potential merits of reducing the withdrawal cost on Lifetime ISAs to 20 per cent in response to cost of living increases.

The Lifetime ISA (LISA) was designed as a long-term savings product to encourage people to save for either a first home or for later life by providing a generous 25% government bonus on up to £4,000 of contributions each year. Money held in a LISA, including the government bonus, can be withdrawn from the age of 60 or at an earlier stage if used as a deposit for the account holder’s first home worth up to a maximum of £450,000. All other withdrawals are subject to a 25% government charge made to reflect the account’s specific intention.

The Government has no current plans to reduce the LISA withdrawal charge to 20%. This would mean that the LISA would provide greater benefits than a current account or traditional savings account and undermine its positioning as a long-term savings vehicle. There are a range of other savings products allowing for immediate access of savings, including cash ISAs.

The government keeps all aspects of savings tax policy under review in the context of future fiscal events.

However, to support millions of households across the UK who are struggling to make their incomes stretch to cover the rising cost of living, the government is providing over £15bn of additional support, targeted particularly on those with the greatest need. This package builds on the over £22bn announced previously, with government support for the cost of living now totalling over £37bn this year.