Key takeaways
- The First Time Buyer ISA launches in April 2029 and replaces the Lifetime ISA for new savers.
- Savers can put in £4,000 a year and get a 25% bonus on the final balance, up to £20,000, paid when they buy a first home.
- The £450,000 property price cap stays. Anyone aged 18 or over can open an account, with no upper age limit.
- Help to Buy ISA holders can transfer in between 6 April 2029 and 1 December 2030. Lifetime ISA savers cannot transfer, but can use both products on the same purchase.
- From 29 October 2026, Lifetime ISA withdrawals for homes above the cap carry a 20% charge instead of 25%.
The First Time Buyer ISA is the government’s replacement for the Lifetime ISA. Budget 2026 confirmed it will launch in April 2029. It allows £4,000 of contributions a year and pays a 25% government bonus on the final account balance, capped at £20,000. The bonus is paid when funds are withdrawn to buy a first home worth up to £450,000.
What the government has confirmed
The Treasury published its response to the consultation alongside the Budget. The design features are below.
| Feature | First Time Buyer ISA |
|---|---|
| Launch | April 2029, in place of the Lifetime ISA |
| Who can open one | Anyone aged 18 or over, with no upper age limit |
| Annual limit | £4,000, counting towards the £20,000 ISA allowance |
| Bonus | 25% of the final account balance, maximum £20,000 |
| When the bonus is paid | On withdrawal for an eligible first home purchase |
| Property price cap | £450,000 |
| Accounts | One FTB ISA at a time |
| Account types | Cash, and stocks and shares, through multiple providers |
Because the bonus is worked out on the final balance, not on contributions, investment growth and interest are included in the figure. That differs from the Lifetime ISA, which pays 25% on contributions.
How transfers will work
- Help to Buy ISA. Holders can move their full balance into the new product, outside the annual limit, between 6 April 2029 and 1 December 2030. That is the date the Help to Buy ISA is due to close.
- Lifetime ISA. Savers cannot transfer to the First Time Buyer ISA, to avoid a second bonus. They can use both products towards the same house purchase.
- Other ISAs. Transfers in from cash, stocks and shares or Innovative Finance ISAs are allowed up to the £4,000 yearly limit. All transfers out are permitted.
- Changing providers. Because only one FTB ISA can be held, a switch must be a full-balance transfer and the original account is closed.
The government is keeping the annual cash ISA limit at £20,000, so anti-circumvention rules do not need to be applied to the new product, including on transfers.
What happens to the Lifetime ISA
Existing Lifetime ISA accounts opened before April 2029 can continue under their existing terms. The Treasury says holders will keep contributing and using their accounts under the current rules.
The £450,000 cap stays on the Lifetime ISA. The Treasury received strong calls to raise or index it. It chose to retain it to focus support on typical first-time buyers and keep the scheme fiscally sustainable. For homes above the cap, a reduced charge applies from 29 October 2026.
The reduced Lifetime ISA charge from 29 October 2026
From 29 October 2026, savers can withdraw Lifetime ISA funds to buy a property above the cap, when the purchase otherwise meets the qualifying rules. The withdrawal charge is 20%, not 25%. The government says this recovers the bonus while letting savers keep their own contributions.
HMRC has published updated guidance for ISA managers and conveyancers on Lifetime ISA withdrawals for first-time purchases. Check the current guidance before advising a client who is buying near or above the cap.
Why it matters for advisers
- Savers have almost two and a half years to wait. The new product is not available until April 2029, so anyone buying before then uses the Lifetime ISA, or a cash ISA.
- Existing Lifetime ISA holders are not disadvantaged. Their accounts continue, but they cannot move across.
- Help to Buy ISA holders have a defined window. Diarise 1 December 2030 as the closure date.
- Transfers are less restricted. The response says anti-circumvention rules do not need to apply to the new ISA, including on transfers.
For the wider picture of ISAs, savings tax and first-home support, see Budget 2026 for savers and first-time buyers and our note that the cash ISA limit stays at £20,000.
Frequently asked questions
When does the First Time Buyer ISA launch?
April 2029. It will be offered in place of the Lifetime ISA, and existing Lifetime ISA accounts opened before then can continue.
How much can I save in a First Time Buyer ISA?
Up to £4,000 a year. Contributions count towards the £20,000 annual ISA allowance, and there is no maximum over a lifetime.
How is the First Time Buyer ISA bonus calculated?
The government pays 25% of the final account balance, subject to a maximum of £20,000. It is paid when funds are withdrawn for an eligible first home purchase.
Can I transfer my Lifetime ISA into a First Time Buyer ISA?
No. The government will not allow transfers from a Lifetime ISA, but you can use both products towards the same house purchase.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 1 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.