Lifetime ISA Closure: What Self-Employed Savers Need to Know Now

If you're self-employed and have been relying on a Lifetime ISA to build your retirement pot, it's time to pay attention. The government is winding down this popular savings scheme — and nearly a million account holders could be affected.

**What's happening?**

Lifetime ISAs are being phased out. These accounts, which launched in 2017, have become surprisingly popular, especially with younger savers. Nearly 964,000 people held active accounts in 2023-24, and that number has jumped by 45% in just two years. But the scheme is now being closed to new entrants and will eventually be discontinued altogether.

**Why should you care?**

For the self-employed, this is particularly frustrating. Unlike employed workers who get automatic access to a workplace pension scheme, self-employed people have to arrange their own retirement savings. The Lifetime ISA's government bonus — 25% on contributions up to £4,000 per year (£1,000 free money) — made it an attractive option with no tax to pay on growth.

Emilia Farr, a self-employed IT worker, had built up £76,000 in her account. "For me, it was a no-brainer," she says. "The government bonus is a real incentive to save." Her frustration is understandable: losing access to this tax-free boost leaves self-employed savers with fewer attractive options.

**What should you do?**

If you have a Lifetime ISA, don't panic. Your existing accounts won't disappear overnight, but you should review your retirement savings strategy now. Here's what to consider:

- **Act quickly**: The deadline for opening new Lifetime ISAs has passed. If you don't have one, you've missed the boat.

- **Check your current account**: Make sure you understand the closure timeline and what happens to your money.

- **Explore alternatives**: Look into self-invested personal pensions (SIPPs) or stocks and shares ISAs, which may suit self-employed savers better.

- **Seek professional advice**: Consider speaking to a financial advisor about your options — many offer free initial consultations.

The government should do more to support self-employed retirement savings. In the meantime, don't let this scheme closure derail your planning. Act now to protect your financial future.

Source: UK pensions: lifetime Isa shake-up raises fears for self-employed