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Lifetime ISA withdrawal

Along with the generous 25% government bonus come rules around taking money out of your Lifetime ISA. Recent changes mean there’s now more flexibility if you’re buying your first home for more than £450,000

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  • 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 and 12 months must have passed since your first payment into the LISA. If the property costs £450,000 or less, you can use your Lifetime ISA savings without a withdrawal charge. If it costs more than £450,000, a reduced government withdrawal charge of 20% applies, provided you meet the other qualifying conditions.

  • SCENARIO 2

    Age 60

    You can use your 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.

Investment Risk Warnings

The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.

EQi does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.

The extent and value of any ISA tax advantages or benefits will vary according to the individual's circumstances. The levels and bases of taxation may also change.

  • Understanding withdrawal charges

    If you withdraw from your Lifetime ISA for any other reason than those permitted under the LISA rules, you'll pay a 25% penalty fee on the amount withdrawn. However, from 29 October 2026, a reduced withdrawal charge of 20% applies if you’re buying your first home for more than £450,000 and meet the other qualifying conditions. There is no withdrawal charge for qualifying first-home purchases of £450,000 or less, or withdrawals from age 60.

    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.

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

    HMRC RULES

     

  • Using a LISA to buy a first home

    There are specific steps to follow when using a LISA to buy your first home. The process involves you, your conveyancer (solicitor), and your LISA provider.

    • The property being purchased must be your first home in the UK
    • You buy the property at least 12 months after you first fund your Lifetime ISA
    • You are buying the property with a mortgage
    • You must intend to live in the property
    • If the property costs £450,000 or less, no government withdrawal charge applies. For properties costing more than £450,000, a reduced withdrawal charge of 20% applies from 29 October 2026, provided the other qualifying conditions are met.

    There may be further requirements specific to the property you would like to purchase, please ensure you review these prior to withdrawing money from the Lifetime ISA.

    LISA KEY FEATURES & FORMS