Lifetime ISA Withdrawal Rules: When Is There a Charge?

gov.uk says money can be withdrawn from a Lifetime ISA without a charge in three situations: buying a first home, being 60 or over, or being terminally ill with less than 12 months to live. For any other reason there is a withdrawal charge of 25%, and for the whole pot it applies to the total amount including the government bonus. This guide covers the 2026-27 tax year.

The site's rules data was last checked against gov.uk on 26 September 2026. Figures typed in this guide may not yet reflect a later change, and the descriptions of gov.uk pages are summaries that may also lag. The current figures are on the ISA rules at a glance page. General information only, not financial advice.

How does the Lifetime ISA work before any withdrawal?

gov.uk says you can put in up to £4,000 each year until you are 50, and that the government adds a 25% bonus to your savings, up to a maximum of £1,000 per year. The £4,000 counts towards the annual ISA limit, which is £20,000 for the 2026-27 tax year (GOV.UK Lifetime ISA overview). The pages read for this guide do not say when the bonus is credited, so ask the provider. For the current limits and dates in one place, see ISA rules at a glance.

gov.uk says that for ISAs generally you can take your money out at any time without losing any tax benefits, and that there are different rules for taking money out of a Lifetime ISA (withdrawing your money).

When can money be withdrawn without a charge?

The source for this section is withdrawing money from your Lifetime ISA.

Buying a first home

gov.uk says you can use your savings to help you buy your first home if all the following apply:

the property costs £450,000 or less;
you buy at least 12 months after you make your first payment into the Lifetime ISA;
a conveyancer or solicitor acts for you in the purchase, and the ISA provider pays the funds directly to them;
you are buying with a mortgage.

gov.uk adds that you cannot use the savings if the private mortgage comes from a relative (parent, grandparent, child, grandchild or sibling), or from certain people connected to them or to your spouse or civil partner. If the person you are buying with has a Lifetime ISA, you can both use your savings and bonus, provided you are both first-time buyers and both meet the conditions. If you also have a Help to Buy ISA, you can only use the bonus from one of them. The page does not define "first-time buyer" in detail.

Being 60 or over

gov.uk lists being 60 or over as a situation where you can withdraw without the charge. The pages read do not attach a purpose condition to it. The pages read also do not compare the Lifetime ISA with a pension or give pension access ages, so for that comparison ask a pension provider.

Terminal illness

gov.uk lists being terminally ill, with less than 12 months to live, as the third situation.

What is the withdrawal charge, and how is it worked out?

gov.uk says that if you withdraw cash or assets for any other reason, you pay a withdrawal charge of 25%. For the whole pot, it says the charge applies to the total amount in your ISA, including the government bonus. The bonus is 25% of what is paid in, so the charge takes back more than the bonus.

A worked example with assumed figures: a saver has paid in £6,400, and the bonus is £1,600, so the account holds £8,000.

Withdrawal of the whole £8,000.
Charge at 25% of £8,000: £2,000.
Amount received: £8,000 less £2,000 = £6,000.
Compared with the £6,400 paid in, that is £400 less.

The charge is a government withdrawal charge, not Income Tax. The Lifetime ISA calculator can run other amounts as illustrations, not forecasts.

What about taking out only part of the money?

gov.uk says that for a partial withdrawal you must take out extra to cover the charge. Its own example is that taking out £160 to receive £120 means a £40 charge. With assumed figures of the same kind: to receive £1,800 after a 25% charge, £2,400 would need to come out, because the charge is £600 and £2,400 less £600 is £1,800.

What are the rules on transfers?

gov.uk says moving a Lifetime ISA to another type of ISA before 60 triggers the 25% charge, and that moving money from a Lifetime ISA to a Help to Buy ISA also means paying the charge. gov.uk says you can transfer money from a Help to Buy ISA to a Lifetime ISA (GOV.UK Lifetime ISA guide). The general transferring your ISA page says there are restrictions on the transfers you can make with a Lifetime ISA, without describing them here.

What happens to a Lifetime ISA on death?

gov.uk says the Lifetime ISA ends on the date of death, and that there is no charge for withdrawing the funds (GOV.UK Lifetime ISA guide).

What does the process look like for a home purchase?

gov.uk says the ISA provider pays the money directly to the buyer's conveyancer or solicitor. The buyer does not receive it first. The pages read do not describe any other steps, how long the process takes, or what happens to the funds if a purchase falls through. Questions to put to the provider and conveyancer early:

How is the request made, and what does the provider need?
How long does the provider take to release funds?
What happens to the funds if the purchase does not go ahead?

What is not guaranteed?

Investment value. A stocks and shares Lifetime ISA can fall in value, and the bonus does not protect against that.
The property limit. A property above the £450,000 limit does not meet the first-home conditions, even if it was within it when saving started.
Provider failure. The pages read do not say whether a given Lifetime ISA is covered by the FSCS, so ask the provider or FSCS.
The rules. The bonus, the charge and the limits are set by the government and can change. This guide describes the position on gov.uk at the date above.

What to check before withdrawing

Does the reason for the withdrawal match one of the three situations?
For a home, is it at least 12 months since the first payment, and is the price at or under £450,000?
Is the mortgage a private one from a relative?
Has the conveyancer been told that Lifetime ISA funds will be used?
If the withdrawal is for another reason, what would the charge cost? The worked example above shows the arithmetic.

Frequently asked questions

When can I take money out of a Lifetime ISA without a charge?

gov.uk lists three situations: buying a first home, being 60 or over, and terminal illness with less than 12 months to live. Any other withdrawal attracts a 25% charge.

Can I take part of my Lifetime ISA out?

Yes, but gov.uk says you must take out extra to cover the charge. For example, taking out £160 to receive £120 means a £40 charge.

What happens to a Lifetime ISA when the holder dies?

gov.uk says the Lifetime ISA ends on the date of death, and there is no charge for withdrawing the funds or assets.

Can I transfer a Lifetime ISA to another type of ISA?

gov.uk says moving a Lifetime ISA to another type of ISA before 60 triggers the 25% charge. gov.uk also notes restrictions on Lifetime ISA transfers, so ask the provider first.

This guide does not constitute financial advice. Your personal situation, tax position, and savings goals may mean different strategies are appropriate. Consider speaking to a regulated financial adviser if you are uncertain.