Glossary · UK
What is Lifetime ISA Withdrawal Charge?
A 25% government charge on Lifetime ISA money withdrawn for reasons other than a first home or retirement.
Full Definition
A Lifetime ISA (LISA) lets those aged 18 to 39 save up to GBP 4,000 a year, within the overall GBP 20,000 ISA allowance, earning a 25% government bonus. You can withdraw tax-free to buy a first home up to GBP 450,000, from age 60, or if terminally ill. Any other withdrawal triggers a 25% government charge on the amount taken out. Because the charge is 25% of the withdrawal rather than of the contribution, it removes the bonus and a small slice of your own money, leaving you with slightly less than you put in. This effectively penalises early access. This is not advice; the lifetime-isa calculator can illustrate outcomes, and gov.uk confirms the rules.
How Lifetime ISA Withdrawal Charge is calculated
you_receive = withdrawal x (1 - 0.25)- withdrawal
- gross amount taken out for an unauthorised reason
- 0.25
- government withdrawal charge
Worked example: GBP 1,000 contribution plus GBP 250 bonus = GBP 1,250; withdrawing it incurs a GBP 312.50 charge, leaving GBP 937.50.