Top cash lifetime ISA named as Rachel Reeves’ dithering gives Brits more time to act

Investment app Moneybox offers savers a market-leading interest rate of 4.7% on its Lifetime ISA – and you can get started with just £1. A Cash Lifetime (LISA) is an individual account designed to help people save for their first home or faster.

People can save up to £4,000 a year in one of these accounts, after which the Government will add a 25% bonus of up to £1,000. Moneybox’s Lifetime ISA rate of 4.7% includes a variable 3.55% base rate and a 01.15% fixed bonus rate for one year. This is paid on top of the Government’s bonus.

Analysts predicted an ISA shake-up would be announced in the Chancellor’s upcoming Spring Statement on March 26, with a particular focus on Cash ISA allowances. However, any announcements are now expected to be delayed until autumn.

The account is available to UK residents aged 18 to 39 and can only be opened and managed via the Moneybox app.

Based on current LISA rules, withdrawals can only be made to purchase a qualifying first house up to the value of £450,000 or for retirement after age 60. The LISA also must be open for at least 12 months before any withdrawals are made.

However, if withdrawals are made for any other reason, a 25% Government penalty is applied, which means people could get back less than they put in.

There aren’t any fees to open a Moneybox Cash Lifetime ISA – and your money is held with third-party banks, covered by the Financial Services Compensation Scheme (FSCS) up to £85,000.

For savers looking to compare, Tembo Money places second on the LISA list with an Annual Equivalent Rate (AER) of 4.6% variable. Savers can launch an account with £1, and interest is paid monthly.

Paragon Bank places third on the list with an AER of 3.51% variable. Savers can launch the account with £1, and interest is paid on the anniversary of opening.

The Treasury Committee is currently reviewing the Lifetime ISA product to determine whether it is still fit for purpose or needs an overhaul.

The rules have garnered widespread criticism in recent years. The tough regulations, combined with soaring house prices, have left each.

The committee aims to assess whether the product’s restrictions and benefits align with its original goals of promoting homeownership and retirement savings. Finance industry experts had to submit their evidence by February 4, 2025. Many analysts , urging the Government to look into simplifying the product.