The future of Lifetime ISAs is looking more promising after the Government announced it did not support proposals to scrap the tax-free saving scheme.
The Treasury Committee had recommended, in its report into household finances, that the scheme should be abolished.
But the Government rejected this proposal, pointing out there were 19 Lifetime ISA providers and over 190,000 open accounts on which over £170 million had been paid out to date on bonuses.
This, it said, demonstrated people welcomed the flexibility of the Lifetime ISA to save. “This is in keeping with the Government’s desire to offer people greater choice and freedom in how they save,” it said.
The Lifetime ISA is a savings scheme designed to help first-time buyers save for a deposit. It can also be used by people as a way of saving for their retirement. As well as the interest being tax-free, it benefits from a 25% Government top up.
Providers have welcomed the news it might not be scrapped. Skipton Building Society, launched the Cash Lifetime ISA in June 2017 and since that time over 120,000 accounts have been opened.
Kris Brewster, its head of products, said: Kris Brewster, Skipton’s Head of Products, said: “We welcome the Government’s commitment to the Lifetime ISA product.
“There is clear evidence that the Lifetime ISA helps to answer the needs of a new generation of savers, supporting property ownership and preparation for life ahead.
“Over 120,000 of our members are already using the product to boost their savings, with over nine out of ten looking to buy their first home.”
And Stuart Miller, customer director, of Newcastle Building Society said it was ‘very pleased’ the Government had stated an intention to continue with the Lifetime ISA. The society was due to to release its own cash ISA onto the market.
“Lifetime ISAs serve two important parts of the market, supporting first-time buyers to save a deposit for a home, as well as those trying to build long-term savings for later life and retirement,” he said.
“Consistent and long term support for those who are saving for a home or planning for future retirement is important in creating better financial futures across generations.”
