A new First Time Buyer ISA is coming: should you wait until 2029?
The 30-second summary
The government plans to introduce a First Time Buyer ISA in April 2029, replacing the Lifetime ISA for new savers. It would offer up to £4,000 in annual contributions and a 25% government bonus, capped at £20,000, paid when qualifying home-purchase funds are withdrawn. Existing Lifetime ISA holders could continue using their accounts.
- Planned launch: April 2029, not available today.
- Up to £4,000 a year in contributions; 25% government bonus.
- Total government bonus capped at £20,000; £450,000 home price cap.
- Existing Lifetime ISA holders can keep contributing under existing rules.
Applies to: UK savings product for qualifying first-time home purchases, with a £450,000 purchase price limit. Planned launch in April 2029.
Check original government sources
Example in numbers
Example: 25% bonus on a £8,000 balance
- Illustrative account balance
- £8,000
- Government bonus: 25%
- £2,000
- Illustrative qualifying withdrawal
- £10,000
Illustration only, assuming eligibility and a qualifying withdrawal. The 25% bonus is planned to be calculated when funds are withdrawn, with a maximum total bonus of £20,000.
How will the First Time Buyer ISA work?
Under the published Budget 2026 design, the new account allows contributions up to £4,000 each year. A government bonus of 25% of the final qualifying account balance would be added on withdrawal, up to a maximum of £20,000. The first-home purchase price cap remains £450,000.
Unlike the existing Lifetime ISA, the announced new account will not have an upper age restriction. It is intended to replace the Lifetime ISA for new savers, but legislation and full provider rules still have to be finalised.
What happens if you already have a Lifetime ISA?
Existing Lifetime ISA holders can continue contributing to and using their accounts under the current rules. The proposal does not require them to close their account.
HMRC says direct transfers from a Lifetime ISA to a First Time Buyer ISA will not be permitted. The two accounts may both contribute towards the same eligible first-home purchase, subject to the detailed rules.
Is it better than a Lifetime ISA?
Not necessarily. The new ISA is still a planned product for 2029, so someone buying sooner cannot currently open it. The bonus timing also differs: the Lifetime ISA pays bonuses into the account as contributions are made, whereas the new First Time Buyer ISA's 25% bonus is planned for a qualifying withdrawal.
The property price cap remains £450,000. If you are considering buying a higher-priced home, check the new reduced Lifetime ISA withdrawal-charge rules rather than assuming the 2029 product removes the cap.
Should you wait to start saving?
Use your expected purchase date and eligibility to choose a savings route. Check cash savings rates, tax allowances and risk where relevant. Do not stop saving for a deposit solely because a future scheme has been announced.
The government's detailed terms, participating account providers and final rules are still to come. Review those before relying on any projected bonus in a purchase budget.
Frequently asked questions
When does the First Time Buyer ISA start?
The government plans to launch it in April 2029, subject to the required legislation.
What is the maximum First Time Buyer ISA bonus?
The proposed maximum government bonus is £20,000, calculated at 25% of the qualifying final account balance.
Will the Lifetime ISA close for existing savers?
No. The published policy allows existing Lifetime ISA holders to continue contributing and using their accounts.
Will the £450,000 property cap go away?
No. The proposed First Time Buyer ISA retains a £450,000 first-home purchase price cap.
Official sources and fact-checks
Information has been checked against the following original publications. Announcements may change before legislation is enacted.
- HM Treasury: Budget 2026 first-time buyer ISA details(28 October 2026)
- HM Treasury: Overview of Tax Legislation and Rates 2026(28 October 2026)
- HMRC: Tax-free savings newsletter 24(29 October 2026)
- MoneySavingExpert: Independent First Time Buyer ISA analysis(28 October 2026)
What can you do next?
Explore a relevant MMG guide or calculator. Calculator assumptions may need updating when new rules take effect.