Lifetime ISA subscriptions: forecast to surge

In its deliberations concerning the Lifetime ISA (LISA), the Treasury Select Committee may like to note that the OBR is forecasting LISA subscriptions to surge by more than £14 billion by 2030. People like it.

Since the LISA was introduced in 2017, a total of £9.5 billion has been subscribed, attracting nearly £2.4 billion in bonuses.[1]  Over the last three years, the number of active accounts has jumped by more than 50%, with total subscriptions rising by 40%.  It continues to be the fastest growing mainstream savings product in the market, with £2.07 billion subscribed to 835,000 accounts in 2023-24, up 10% on the year before.[2]  And while LISA subscriptions also rose 10% in 2022-23, those to Stocks and Shares ISAs fell by 18% in that year.[3]  

Meanwhile, of the £93.5 billion spent by first-time home buyers in 2023 [4], only £850 million came from LISA withdrawals [5]; less than 1% of the total capital requirement. Clearly, contrary to rumour, the LISA's contribution to house price inflation is minimal.

But the LISA is not perfect. It includes some structural features that serve no consumer purpose, notably the age restrictions, the implicit 6.25% early withdrawal penalty (on withdrawals not used to purchase the first home) and the house price cap. These should all be removed.

[1] Including 2023-24. HMRC; Individual Savings Account (ISA) Statistics, Sept. 2024 and OBR Economic and Fiscal Outlook, October 2024; Tab 4.10, Detailed forecast tables: Expenditure.

[2] 755,000 accounts were subscribed to in 2022-23 (HMRC; Individual Savings Account (ISA) Statistics, Sept. 2024). 835,000 active accounts for 2023-24 is derived from HMRC reporting of total subscriptions in that year.

[3] During 2022-23, the last reported year of Stocks and Shares ISA data. Individual Savings Account (ISA) Statistics, Sept. 2024.

[4] Halifax; First Time Buyer Report. 

[5] HMRC; Lifetime ISA (LISA) statistics 2024.