First Time Buyer ISA set to replace the Lifetime ISA

UK savers looking to buy a first home face a redesign of government-backed deposit help.

HM Treasury has consulted on a new First Time Buyer ISA (FTB ISA) that would replace the Lifetime ISA (LISA). This is a UK-wide product change that would apply to Scottish buyers in the same way as elsewhere.

The consultation (updated 29 June 2026; responses closed 18 August 2026) says the FTB ISA would be

for first-home purchase only,
available to UK residents aged 18 or over with no upper age limit,
would pay a government bonus at the point of a qualifying purchase rather than month by month during saving.
Cash and stocks-and-shares versions are both intended.

The purchase would need a mortgage; cash-only buys would not qualify for the bonus. Savers could claim the bonus only after the FTB ISA had been held for a minimum of a year.

How much you could pay in each year, the maximum home price that qualifies, and the size of the government top-up are still to be set at a later Budget or fiscal statement.

Until those numbers are set, a direct like-for-like comparison with today’s LISA (£4,000 a year subscription within the £20,000 ISA allowance; 25% bonus; £450,000 UK-wide price cap) is not possible.

The government says that when a new cap is announced it will be aligned across the FTB ISA, LISA and Help to Buy ISA so existing holders are not left on a different limit.

Existing LISA holders would not be able to transfer into the FTB ISA (they have already received a bonus). They could keep contributing to a LISA under current rules indefinitely, hold both products, and use both towards the same purchase — but only subscribe to one of them in a given tax year.

Help to Buy ISA balances could be transferred into the FTB ISA up to the subscription limit. Until the FTB ISA is available, new LISAs can still be opened.

The Treasury’s case for replacing the LISA includes rising unauthorised withdrawals and limited high-street availability.

HMRC 2025/26 figures reported that 154,100 people made unauthorised LISA withdrawals (triggering almost £119m in charges) while a record 99,750 used a LISA to buy a first home. So more people were hit by the exit charge than completed a LISA-funded purchase that year.

Crucially, with the First Time Buyer ISA there would be no early-withdrawal charge of the kind that applies to unauthorised LISA withdrawals.

First Time Buyer 🏡

First Time Buyer ISA set to replace the Lifetime ISA

Sources