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Lifetime ISA withdrawal

Along with the generous 25% bonus come rules around taking money out

Open your LISA
  • 2%

    Renting costs an average 2% more per month than a mortgage

  • 40%

    The percentage of 18-40 year olds without savings for their first home

  • £44k

    The average deposit put down by first-time buyers

Rules on withdrawal

There are three scenarios in which you can withdraw from your Lifetime ISA:

  • SCENARIO 1

    Buying your first home

    The home must be in the UK, it cannot cost more than £450,000 and 12 months must have passed since your first payment into the LISA.

  • SCENARIO 2

    Age 60

    You can use you LISA as an extra retirement pot; you can take your savings once you reach age 60.

  • SCENARIO 3

    Terminal illness

    You can withdraw money before age 60 without paying any penalty if you are terminally ill with less than 12 months to live.

  • Avoid the 25% penalty

    If you withdraw from your Lifetime ISA for any other reason, you'll pay a 25%* penalty fee on the amount withdrawn.

    So you need to be sure that you can afford to make the investments or you could lose out.

    If you die, your Lifetime ISA ends on the date of your death and will form part of your estate for inheritance tax purposes. As the money will no longer be inside a Lifetime ISA wrapper, no government charge will apply on withdrawals.

    *Due to the Covid-19 crisis the government have temporarily reduced the LISA withdrawal charge to 20% between 6 March 2020 and 5 April 2021 (inclusive). This will mean account holders will only have to pay back any government bonus they have received, but will not pay the additional withdrawal charge of 5%.

    The rule change will be backdated to 6 March, so anyone who has withdrawn their money early since that date and paid a 25% charge will have the difference refunded.

  • Is a LISA right for you?

    A Lifetime ISA is not a flexible account so you will not be able to withdraw money and later pay it back in.

    It is better to think of the Lifetime ISA as a great way to secure a bonus but recognise that it comes with restrictions.

    For more information, read the HMRC rules for Lifetime ISAs.

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