Former chancellor George Osborne introduced the LISA in the 2016 Budget, aiming to provide an alternative method of tax-free saving for retirement while simultaneously encouraging people under 40 to save for a property by offering incentives which could help people get on to the property ladder. 

The product enables people under 40 to open a LISA, and to contribute up to £4,000 each year until they’re 50. At the end of each tax year, this is topped up by a 25% bonus from HMRC. 

Individuals are only able to withdraw their money from the account if they are either buying their first home, terminally ill with less than 12 months to live or aged 60 and over. Withdrawal for any other reason comes with a 25% charge. 

The Treasury Committee is aiming to gather views from the finance industry, consumers and experts. 

As part of this work, MPs are looking for answers to the following questions: 

+ Is the Lifetime ISA fit for purpose in its current design, including as a combined product for house purchase and pension saving? 

+ How well do consumers transition between using the Lifetime ISA as a product for house purchase, to then a product for pension saving? 

+ Given its policy purposes, is the Lifetime ISA value for money for the Government? 

+ Is the Lifetime ISA a suitable pension savings product? 

+ Should the Lifetime ISA be abolished? 

+ Should the Lifetime ISA be reformed to remove the withdrawal penalty? 

+ Should the Lifetime ISA be restricted to those with no access to a workplace pension? 

+ Should the Lifetime ISA house price cap be raised in line with inflation, or removed? 

+ Should the annual Lifetime ISA limit be raised from £4,000? 

+ Should the Lifetime ISA be reformed in any other way? 

Submissions can be made on the Treasury Committee website. The deadline for submitting evidence is Tuesday 4 February.

Reflecting on the call for evidence, Tom Selby, director of public policy at AJ Bell, said: “Lifetime ISAs aren’t perfect and this review from the Treasury Committee is a good opportunity to address some of the issues with their design, as well as exploring where the Lifetime ISA fits in a simplified ISA landscape.

“AJ Bell has long campaigned for an end to the punitive early withdrawal penalty, instead reverting to the system used during the pandemic when the penalty only matched the original bonus received on the account.

“Likewise, raising the property purchase price limit, which has remained fixed since the Lifetime ISA was introduced, would be an obvious quick win. Analysis from AJ Bell shows that in numerous areas average flats and terraced houses – the sorts of properties that might well appeal to aspiring homeowners – now exceed the £450,000 cap.”