The Autumn Budget 2026: First Time Buyer ISA

The Government confirmed in the Autumn Budget that a new First Time Buyer ISA will be introduced from 6 April 2029.

The new ISA will replace the Lifetime ISA as the principal Government-supported savings product for first-time buyers and has some similarities to the former Help to Buy ISA.

Savers will be able to contribute up to £4,000 each year. This is more than the former Help to Buy ISA ordinarily allowed, under which savers could contribute £200 per month, after an enhanced initial contribution.

The Government will pay a 25% bonus on contributions, meaning that a buyer will receive a £1,000 bonus for every £4,000 saved.  

Unlike the Lifetime ISA, the bonus will not be added to the account as contributions are made. Instead, it will be paid when the funds are withdrawn for a qualifying first-home purchase. This means savers will be able to withdraw their own funds without incurring the withdrawal charge currently associated with a LISA.

Some key conditions of the new scheme are:

• There will be no upper age limit on who can open a new First Time Buyer ISA

• The 25% bonus will only be payable if the purchase price is no more than £450,000

• The maximum value of the bonus will be capped at £20,000

• The bonus will be paid only on a buyer’s net contributions and will not include interest earned on those contributions

• The bonus cannot be claimed by a cash buyer, so the buyer must be obtaining a mortgage

Existing LISA holders will be able to use funds held in their LISA alongside funds held in a new First Time Buyer ISA towards the same purchase. However, funds held in a LISA cannot be transferred into the new ISA, as the Government bonus has already been applied. Savers will also be permitted to subscribe to only one of the two products in the same tax year.

Unlike the former Help to Buy ISA, the bonus will be available before completion and may therefore be used towards the deposit payable on exchange, provided completion takes place within 90 days. If completion does not take place within that period, the conveyancer must return the funds and bonus, although the buyer should retain eligibility to claim again for a later qualifying purchase.

Although it remains to be seen exactly how the drawdown process will work, it appears that the Government has sought to address some of the key criticisms of the LISA and is moving towards, or arguably back to, a simpler bonus scheme for first-time buyers.

SOURCES

First Time Buyer ISA: Consultation - GOV.UK  

Government confirms launch of new First Time Buyer ISA | Financial Reporter

First Time Buyer ISAs (FTB ISAs) - what we know so far