Taking £12,500 out of a Lifetime ISA before 60, for anything other than a first home, costs a £3,125 government charge. You receive £9,375.
| You paid in | £10,000.00 |
| Government bonus at 25% | £2,500.00 |
| Pot | £12,500 |
| Withdrawal charge at 25% | −£3,125 |
| You receive | £9,375 |
| Down on your own money | £625.00 (6.25%) |
That last line is the number worth remembering. A 25% charge on a pot that grew 25% does not cancel out — it leaves you 6.25% worse off than if you had never opened the account.
No investment return is assumed anywhere on this page. Every figure is money you paid in plus the government bonus — the only part that is guaranteed. A stocks-and-shares LISA can do better or worse than this, and nobody can tell you which.
| Withdrawal | Charge | You receive |
|---|---|---|
| Withdraw a quarter (£3,125) | £781 | £2,344 |
| Withdraw half (£6,250) | £1,562 | £4,688 |
| Withdraw all of it (£12,500) | £3,125 | £9,375 |
£3,125. The charge is 25% of the amount withdrawn, not 25% of the bonus, so you receive £9,375.
No, and this is the part almost everyone gets wrong. The bonus added 25% to your money; the charge then takes 25% of the larger amount. £1 paid in becomes £1.25, and 25% of that leaves £0.9375 — you end up 6.25% down on your own money.
Buying your first home at £450,000 or less with a mortgage, at least 12 months after your first payment; reaching age 60; or terminal illness with less than 12 months to live.
Only for the qualifying withdrawals above. There is no hardship exemption; the temporary reduction to 20% during 2020 and 2021 ended on 5 April 2021.
Rates and limits read 19 August 2026 from GOV.UK: Lifetime ISA, withdrawing money and ISA allowances. Figures are for the 2026/27 tax year.
Rates and limits for the 2026/27 tax year, read 19 August 2026 from GOV.UK. Nothing here is financial advice: it is arithmetic on published rules, and no investment return is assumed anywhere.