It has been criticised by experts for years for being a gimmick, flawed and a poor use of taxpayer cash.
If you think the Lifetime Individual Savings Account needs a good new-year makeover, now you can have your say by answering a call from a cross-party group of MPs for your views.
The Lifetime Isa (Lisa) was launched eight years ago to help people save for their first home or boost their retirement savings.
For those whom it works for, it is very generous. Anyone under 40 can open one and contribute up to £4,000 each tax year until they’re 50.
At the end of each tax year, their balance is topped up by a 25 per cent bonus from HMRC.
Review: The Lifetime Isa was launched eight years ago to help people save for their first home or boost their retirement savings
That’s a hearty bonus of up to £1,000 a year – or £32,000 for someone who opened an account aged 18 and paid in the maximum until they hit 50.
Money saved in a Lisa must go towards the purchase of a first property or be withdrawn after the age of 60.
But over the years, flaws have emerged. So far, the Government has ignored them, despite protests from individuals, financial firms, consumer groups and Money Mail. The Treasury committee’s request for views yesterday is the first sign that this could change.
The greatest flaw is that the Lifetime Isa can only be used to buy a first property up to the value of £450,000.
That may have been ample for most first-time buyers when it was launched in 2016, but the cap has never been raised. Had it increased with inflation it would now be worth around £600,000.
What’s more, those who choose to withdraw their Lisa savings when they realise they can’t use them to buy a property due to the price cap are stung with a penalty of 25 per cent of the total value. That is the equivalent of the full bonus being clawed back – plus another 6.25 per cent.
The restrictions mean that some Lisa holders have been charged more than £11,000 to withdraw their money.
Simply increasing the property price cap in line with house-price growth would make the Lisa – which helped 56,900 first-time buyers to get on the property ladder last year alone – fairer and more attractive.
You can share your views at committees.parliament.uk/call-for-evidence/3533. The deadline is Tuesday, February 4 at 5pm.
Check the best cash Isa rates in our savings tables