HMRC rules could change to save people with savings accounts £11,000 each

Figures recently released by HMRC showed the total value of Lisa withdrawal charges hit just over £75.2 million in 2023-24 – nearly 40% higher than the previous year when they totalled £54.3 million.

Chancellor Rachel Reeves is under pressure to revamp Lifetime ISA rules after HMRC charged people with £11,000 fines. Figures recently released by HMRC showed the total value of Lisa withdrawal charges hit just over £75.2 million in 2023-24 – nearly 40% higher than the previous year when they totalled £54.3 million.

The total value of withdrawal charges in 2023-24 was £75,272,000, up from £54,328,000 in 2022-23. Data showed that in the tax year 2022-23 the average of the top 25 penalties paid for unauthorised withdrawals was £11,000.

The average of the top 25 withdrawals made, rounded to the nearest thousand, was £44,000. Rajan Lakhani, a spokesman for Plum, which expects to launch a Lisa soon, said: “These findings show how the current ceiling is shutting people out of the housing market.

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"There are currently dozens of local authorities across the country where the average house price is greater than the £450,000 cap, and that number is only set to rise in the future. The Chancellor has put home ownership at the centre of the Labour Party’s programme for government.

"That’s why it makes sense to index-link the Lifetime Isa ceiling from the time of its launch and bring in a new limit closer to £600,000." He went on to say: “Young people trying to get a foot on the housing ladder have enough challenges already without having to worry about potentially losing a chunk of their hard-earned savings.”

A Treasury spokesperson said today: “Decisions on tax are made in the round at the Budget. Across the vast majority of the country the average price for a first-time home remains below the £450,000 Lifetime Isa cap, and we are committed to building 1.5 million more homes so that people can turn the dream of owning a home into a reality.”