Lifetime ISA Withdrawal Penalty Calculator — The Real Cost
HMRC has been cracking down hard on Lifetime ISA (LISA) withdrawals — over 129,000 savers were penalised in the latest tax year, with an average fine of £790. Withdraw for anything other than a first home (up to £450,000), turning 60, or terminal illness, and a 25% government charge applies to the whole withdrawal — which claws back more than just your 25% bonus. This calculator shows exactly what you'd keep.
Based on the standard 25% government withdrawal charge. Some LISA providers may also deduct their own admin fee on top — check with your provider.
Based on the standard 25% Lifetime ISA government withdrawal charge. Provider admin fees, if any, are separate and not included here. Always check gov.uk and your provider before withdrawing.
How to use this tool
- Enter the amount you're thinking of withdrawing from your Lifetime ISA.
- Optionally add how much of that was your own money (not the government bonus or growth) to see exactly how much extra you'd lose beyond the bonus itself.
- Select your reason — only a first home purchase (up to £450,000), reaching age 60, or terminal illness avoid the charge.
- Press Calculate to see exactly what you'd walk away with.
Frequently asked questions
Why does the 25% charge cost more than just losing the bonus?
The government adds a 25% bonus on top of your contributions (so £4,000 contributed becomes £5,000 with the bonus). But the exit charge is 25% of the whole withdrawal — 25% of £5,000 is £1,250, which is £250 more than the £1,000 bonus you received. You end up losing some of your own original money too, not just the top-up.
What counts as an authorised withdrawal?
Buying your first home (up to £450,000, using a mortgage) after 12 months of saving, reaching age 60, or being diagnosed with a terminal illness with under 12 months to live. Anything else — an emergency, a different big purchase, moving the money elsewhere — triggers the 25% charge.
Why is HMRC issuing so many penalty letters right now?
ISA providers are now required to send HMRC more detailed contribution and withdrawal data, and better data-matching has surfaced far more breaches than before — over 129,000 Lifetime ISA holders were penalised in the latest tax year, with £102 million collected in charges, up from £75 million the year before.
Is a Lifetime ISA still worth it despite the penalty risk?
For its intended purposes — a first home or retirement saving you won't touch early — the 25% government bonus is hard to beat. The risk is entirely about using it as a general emergency fund; if there's a real chance you'll need the money early for something else, a regular savings account or stocks & shares ISA avoids the exit charge entirely.