First Time Buyer ISA UK 2027 — Proposal, Bonus and LISA Rules

The UK government has consulted on a new First Time Buyer ISA (FTB ISA) intended to replace the Lifetime ISA for future first-home saving. The proposed account would be designed only for buying a first home, with a government bonus paid when eligible funds are withdrawn for a purchase.

The proposal is not an account that savers can open today. The consultation closed on 18 August 2026, and important settings—including the annual subscription limit, bonus level, property price cap and launch date—remain to be confirmed at a future fiscal event or through final implementation rules.

Until a replacement is available, people can still open a Lifetime ISA if they meet its current conditions. Existing Help to Buy ISA accounts also remain subject to their current rules. Do not close an existing account because a consultation has been published.

What is the First Time Buyer ISA?

The proposed FTB ISA would be an ISA product for people saving to buy their first home. It is intended to work inside the existing ISA framework, so interest, investment growth and the government bonus would be tax-free within the wrapper under the proposed design.

The proposal describes both Cash and Stocks and Shares versions. The bonus would be calculated on net subscriptions—subscriptions less certain withdrawals—rather than on the final account value. The ISA manager would report to HMRC and claim the bonus for the buyer.

This is a design proposal, not a final account specification. Providers, account-opening processes, transfer mechanics and customer documentation will depend on the final rules.

How would the proposed bonus work?

The consultation proposes that the bonus would be paid when the saver withdraws funds to purchase a first home. The purchase would need to be made with a legal mortgage, and the account would need to have been open for at least one year before the bonus is claimed.

The proposal also describes a 90-day completion window after the bonus is claimed. If a transaction fails, the bonus would be returned through the conveyancer and ISA manager, while the buyer would retain eligibility for a future purchase under the proposed design.

What is still unconfirmed?

The consultation explicitly leaves several important parameters open:

• the annual subscription limit;
• the percentage and any lifetime cap for the government bonus;
• the maximum property price;
• the final launch date;
• the final provider and conveyancer processes; and
• the detailed interaction with the reformed cash ISA limits and transfers.

That means it is not safe to advertise a particular FTB ISA bonus or assume that a planned purchase will fall below the eventual price cap. The existing LISA figures should not be copied into a future FTB ISA article as if they were confirmed.

What happens to the Lifetime ISA?

The government’s consultation says the FTB ISA is intended to be offered in place of the LISA once available. Until then, it remains possible to open and contribute to a LISA under the existing rules. Current LISA holders would continue to use their existing accounts, and the consultation proposes that an existing LISA and a new FTB ISA could both contribute to the same purchase, subject to the final rules.

The consultation does not propose transferring an already-bonused LISA balance into the new FTB ISA for another bonus. A person could hold both products, but the proposal would restrict saving into only one LISA or FTB ISA in the same tax year.

Read the existing UK Lifetime ISA guide for current rules, including the current contribution and withdrawal framework. That guide should remain the reference for an account available today until official replacement rules are published.

What happens to the Help to Buy ISA?

New Help to Buy ISA accounts are closed to applicants, but existing holders can continue under the current scheme rules. The consultation proposes allowing Help to Buy ISA holdings to transfer into an FTB ISA up to the new subscription limits, subject to the final design.

This is not an immediate transfer right. A saver should wait for final provider and HMRC instructions before moving an existing account. The consultation also aims to align the property price cap for the FTB ISA, LISA and Help to Buy ISA so existing savers are not disadvantaged, but the eventual cap is not yet published.

How would the FTB ISA interact with the £20,000 ISA allowance?

The proposal says FTB ISA subscriptions would count towards the overall annual ISA allowance. The proposed cash FTB ISA limit would also count towards the £12,000 annual cash ISA limit for people under 65 from 6 April 2027, subject to the wider ISA reform rules.

The consultation describes transfer restrictions designed to prevent the cash limit being bypassed. In particular, transfers from Stocks and Shares or Innovative Finance ISA accounts into a Cash ISA or Cash FTB ISA would not be permitted under the proposed approach.

These rules are part of a broader ISA reform package. Check the ISA allowance guide and HMRC’s tax-free savings update again when final regulations are published.

Should a first-time buyer wait for the new ISA?

There is no universal answer. Waiting could mean missing existing LISA contributions or delaying a savings plan, while opening a current product creates its own eligibility and withdrawal conditions. The FTB ISA’s final numbers and availability are not known.

Compare the decision using current rules:

• whether you are eligible to open or contribute to a LISA now;
• the likely purchase date and whether a 12-month account period matters;
• the current LISA property cap and withdrawal charge;
• whether your purchase price and mortgage structure fit the proposed FTB ISA design; and
• whether you need access to the money for a reason other than buying a first home.

For the separate property-tax question, use the UK first-time buyer Stamp Duty guide. The ISA proposal does not change Stamp Duty Land Tax by itself.

Current account versus proposed account

Separate the account you can open now from the policy design being consulted on. A LISA has live eligibility, contribution, bonus and withdrawal rules. The proposed FTB ISA has no provider application, no final subscription limit and no confirmed bonus rate. A provider cannot promise that a saver who waits will receive the consultation's described features, and a saver should not treat a consultation table as a product illustration.

Use a dated decision record. Note the account held, contributions made, bonus already credited, expected exchange or completion date, deposit target, need for emergency access and the effect of a failed purchase. If you choose a LISA now, check the current withdrawal charge and property-price condition before contributing. If you keep cash outside an ISA while waiting, consider ordinary savings tax and interest-rate risk. If you invest the deposit, include market-value risk and the time needed to sell and transfer funds before completion.

The proposed 12-month account-opening rule also changes the timing question. A person opening an account after a consultation announcement cannot assume that a purchase in the same year will qualify for the bonus. The final legislation may define the relevant opening date, transfer treatment and evidence of a genuine account history. Keep provider statements and transfer records, but wait for the final rules before designing a completion timetable around them.

Transfers, bonuses and a failed purchase

Transfers should not be treated as a way to create a second government bonus. The consultation discusses how existing Help to Buy ISA savings and LISA balances could interact with the proposed product, but the final manager-to-manager process, subscription limits, bonus calculation and treatment of already-bonused money remain to be written. Do not withdraw to a bank account and manually redeposit unless the final rules expressly allow it; an apparently simple movement can become a withdrawal, a new subscription or a loss of tax-advantaged status.

The proposed 90-day completion window makes conveyancer coordination important. Before a bonus claim, confirm the intended completion date, mortgage evidence, property's price, first-time-buyer status and the manager's required documents. If completion fails, retain the failed-contract evidence and follow the provider's return process. Do not assume that a returned bonus restores contribution headroom or that the same funds can be claimed again without a final rule explaining the treatment.

Keep the policy status visible

Use labels such as “consultation proposal”, “existing LISA rule” and “final implementation” in internal planning documents. When HM Treasury publishes a response or legislation, compare each open parameter: account availability, annual limit, bonus percentage, lifetime cap, property-price cap, age, mortgage requirement, account-open period, transfer route and failed-purchase treatment. Update the saving plan only after the provider and HMRC instructions match the legislation.

Practical checklist for future buyers

Frequently Asked Questions

This guide reflects HM Treasury and HMRC material available on 20 September 2026. Check the final fiscal announcement, legislation, ISA regulations and provider guidance before relying on the First Time Buyer ISA design.

Official sources

• HM Treasury: First Time Buyer ISA consultation
• HM Treasury: First Time Buyer ISA consultation page
• HMRC: Tax-free savings newsletter 22
• GOV.UK: Lifetime ISA
• GOV.UK: Help to Buy ISA