The Lifetime ISA charge is 25%. It costs you 6.25% of your own money.

HM Revenue and Customs (HMRC) published its annual savings figures on 16 September 2026. In the year to March 2026, 154,100 people took money out of a Lifetime Individual Savings Account (Lifetime ISA) for a reason the rules do not allow, and paid about £119m in charges to do it. That is roughly £772 each.

The exit charge is 25%, and because it applies to the government bonus as well as to your savings, it claws back the bonus and then takes a further 6.25% of the money you put in yourself.

If you hold one of these accounts, the fork is this: take the money when you need it and pay the charge, hold it until you buy a qualifying first home, or leave it until you are 60. What follows is what each costs. There is also a fourth thing now, which did not exist a year ago: the Treasury has consulted on replacing the account altogether.

Why the charge is worse than it sounds

The account pays a 25% government bonus on what you put in, up to £4,000 a year — a maximum of £1,000 of bonus. The exit charge is also 25%, but it is charged on the whole amount you take out, bonus included. Those two 25%s are not the same 25%.

Pay in the full £4,000 for a year, then take it all out again:

Item	Amount
You pay in	£4,000
Government bonus added	£1,000
Pot	£5,000
Charge on the whole pot	£1,250
You receive	£3,750
Your own money lost	£250

GOV.UK works the same sum in smaller numbers: savings of £800 earn a £200 bonus and give a pot of £1,000, and if you withdraw it all the £250 charge “will leave you with £750” — £50 less than you saved.

So the charge removes the bonus and then takes 6.25% of what was yours. Before any interest or growth, you get back less than you put in.

The three branches, in pounds

Take it out now. On a £5,000 pot you receive £3,750. Of the £1,250 gone, £250 was your own contribution. And if you took the money for a house purchase that then fell through and the funds were not returned to the account, the charge is applied afterwards.

Use it for a first home. No charge at all, provided the property costs £450,000 or less, you are a first-time buyer, and the money goes to an eligible conveyancer. Last year 99,750 people did exactly this, withdrawing an average of £15,407 each.

Leave it until 60. No charge, and the bonus stays. The cost of this branch is not a fee, it is time: on a pot opened at 30, that is thirty years during which the money cannot be used for anything else without the charge above.

What the answer turns on

The first thing is the price of the home you end up buying. The £450,000 cap is a hard line and it has not moved since these accounts opened in April 2017. Nine years of house price growth have run past it. If you are buying in London or the South East, the risk is not that you fail to save enough — it is that you save successfully and then find the flat you want is £460,000, at which point your own savings account charges you 6.25% to release your deposit.

The second is whether you need the money before 60 for anything else. Redundancy, a move, a relationship ending: none of those is a qualifying reason.

The third is your age. You must be aged 18 to 39 to open one, you cannot pay in after 50, and between a first home and your sixtieth birthday there is no charge-free way out.

The fourth has changed. The government’s own First Time Buyer ISA consultation says the Lifetime ISA is “not working well for many”, that the new account “will be offered in place of the Lifetime ISA”, and that paying the bonus at the point of purchase “removes the need for a withdrawal charge”. The same document records unauthorised withdrawal charges “reaching 8% of all accounts opened in 2024-25”.

What that does not do is help anyone holding a Lifetime ISA today. The consultation closed on 18 August 2026, the Treasury has not published its response, no launch date has been given, and the document says holders “will not be able to transfer their LISA to the new FTB product” — though they will be able to use both for the same purchase. Until the new account exists, the rules above are the rules, and a decision made on the assumption that they will change soon is a decision made on a guess.

This page lays out what the rules are. It does not tell you which branch to take, and nobody writing from outside your circumstances can.

The arithmetic in the table above is ours, worked the way our methodology describes, from the rules on GOV.UK listed at /sources.

Where these figures come from

• Commentary for Annual savings statistics: September 2026 — HM Revenue and Customs
• Annual savings statistics 2026 — HM Revenue and Customs
• Lifetime ISA withdrawal charges and charge-free withdrawals — HM Revenue and Customs
• Lifetime ISA: Overview — GOV.UK
• Key Friday £3,088 alert over ISA mistake as HMRC gives update — AOL UK

Every figure traces to a dated document — the line this section is named after. If one here is wrong, tell us and it gets fixed publicly. Work out your own figures.