• Freedom of Information (FOI) data reveals how the UK’s top Lifetime ISA savers managed to build pots large enough to cover the average deposit needed to buy a first-time buyer home in most parts of the country.
• Smart money app Plum estimates it could take a couple just four-and-a-half years to build a £50,000 war chest.

London, 22nd May 2025 – The UK’s top Lifetime ISA savers were able to put more than £50,000 in tax wrapper savings towards the cost of their first home, according to latest annual figures.

A Freedom of Information (FOI) request made by smart money app Plum revealed the huge deposits built by investors in the government-backed savings accounts designed to support first-time buyers and those planning for retirement.

Lifetime ISAs (or LISAs) were launched in April 2017 to help people get a foot on the housing ladder or help them save for later life.

Data released by HMRC in response to Plum’s FOI request has revealed the top 25 withdrawals made to buy a home in 2022-23 averaged £51,000 – meaning the top saver’s pot will almost certainly have been far greater.

According to the figures, 42,810 First Time Buyers (FTBs) used LISA pots in excess of £10,000 to get their foot on the housing ladder. Of these, 11,280 built home deposits greater than £20,000. The average withdrawal to buy a home was £13,877.

News of the £50,000+ pots emerged as Plum launched its own LISA with an interest rate now of 4.75% AER (variable) – currently the most attractive cash rate on the market.

Rajan Lakhani of Plum commented: “It was Albert Einstein who said that compounding was the eighth wonder of the world, and who are we to argue given the impressive size of these Lifetime ISAs.

“There are very few savings options that offer a guaranteed top-up of 25% on your annual contribution. Against a backdrop of recent global volatility, it’s reassuring to know the Lifetime ISA can deliver stunning gains regardless of the broader economic outlook.

“And don’t forget that this government boost comes in addition to any interest you earn on savings.

“A LISA saver maxing out their annual allowance could reasonably expect to amass a sum of £50,000 in approximately eight-and-a-half years assuming annualised interest of 4%.

“A couple, however, could do it in around four-and-a-half years, or alternatively save £100,000 together in around eight-and-a-half years.

“That’s a huge chunk off the cost of the average first-time buyer UK home – which currently stands at around £311,034.”1

The average first-time buyer deposit ranges from £30,678 in the Northeast of England to £124,688 in London.2

As part of its LISA launch, Plum has created a digital tool which allows savers to see how long it would take them to build the deposit necessary for a starter home in their desired postcode.

When it comes to a deposit, lenders will usually ask for at least 5 per cent of the property's value, and more typically between 10 to 20 per cent. It’s estimated that the average UK first-time buyer deposit – including London buyers – stands at £61,090.3

Under current rules, the government imposes a 25% penalty on the total value of the savings pot at its closure for home purchases in excess of £450,000. Plum told the Treasury Committee in January that the current ceiling is shutting out first-time buyers in London and the south-east and a new index-linked cap of £600,000 should be introduced.

Soaring house prices, a cost-of-living crisis and bank affordability tests have made the challenge facing first-time buyers more daunting than ever before. The average age of a first-time buyer is currently 33 - up from 30 a decade ago - and the average price of properties purchased is 6.6 times the average UK salary of £46,970 a year.4

Know the rules

The Lifetime ISA is a form of tax-free savings account designed to help people looking to do one of two things: save for their first home or save for later life.

To sweeten the deal, the UK Government offers 25% tax relief on the money you save thanks to an income tax reimbursement from HMRC.

A Lifetime ISA saver can invest up to £4,000 every tax year, meaning there's the potential to earn a maximum bonus of £1,000 annually up until the age of 50.

If you want to take money out before you're 60 and you aren't buying your first home, there's usually a 25% government charge. That not only takes away the government bonus, but a portion of your own hard-earned savings too, meaning you could get back less than you put in.

Couples can pool their LISAs, assuming both are first-time buyers, but LISAs cannot be used to buy a home worth £450,000 or more.

A LISA account must be open for at least 12 months before a saver can withdraw and claim their bonus.

There are no penalties for those withdrawing money over the age of 60, making them an attractive retirement investment option.

Interest-free gains

A key feature of ISAs is that interest earned is exempt from taxation. Currently, basic rate taxpayers can earn just £1,000 interest before being taxed, and higher rate just £500.

Elevated interest rates mean more and more people face unexpected tax bills. The government expects 2.07 million basic rate taxpayers to pay tax on their savings interest in the current tax year, including 590,000 higher rate taxpayers and 471,000 additional rate taxpayers.5

Assuming interest rates of 4%, a higher-rate taxpayer would need only £12,500 savings to hit their limit, while a basic rate payer would need £25,000.

LISA savers pay no tax on interest regardless of their income.

Rajan Lakhani said: “Not only are LISA savers making turbo-charged gains of 25% on their annual contributions thanks to the government top-up, they are also managing to shield every penny from the taxman.

“Making maximum use of tax-efficient wrappers is a cornerstone of long-term wealth building.”

Lifetime ISA statistics

Source: HMRC Freedom of Information request (2022-23 tax year)

-ENDS-

About Plum:

Plum is the ultimate smart money app, helping two million people to invest, save and manage their spending with automation. Founded in 2016 by Victor Trokoudes (ex-Wise), Plum automates parts of personal finance that people find difficult or don’t have time for, with effortless saving, empowered spending and accessible investing. Plum has helped over 2 million customers across Europe do more with their money, with £5 billion set aside via the app. Plum was named Best Personal Finance App at the British Bank Awards 2023 and was named one of the fastest-growing companies in the UK by the Deloitte Technology Fast 50 2023. Plum is headquartered in London, UK, and has offices in Athens, Greece and Nicosia, Cyprus.