Announced in a raft of 14 consultations released by HMRC in one afternoon, the government has confirmed it will scrap the Lifetime ISA (LISA), replacing it with the First Time Buyer ISA (FTB ISA).

The consultation paper acknowledged that the LISA ‘is not working well for many’.

The major point of contention for LISA savers is the 25% withdrawal charge which is considered ‘deeply unfair’.

HMRC said the number of ‘unauthorised’ LISA withdrawal charges is increasing year on year, reaching 8% of all accounts opened in 2024-25, with more LISA holders losing a part of their original savings than have used it to purchase a house.

For the soon to be scrapped LISA, the withdrawal charge causes savers to lose the government bonus, plus 6.25% of their own contributions.