What is the 25% LISA withdrawal penalty?

Withdrawing for any reason other than first home, age 60+ or terminal illness costs a 25% government charge. This is on the full withdrawal — including your own money — so a £4,000 + £1,000 bonus pot withdrawn early returns just £3,750, less than you paid in.

Can I use a LISA alongside a Help to Buy ISA?

You can hold both, but you can only use the bonus from one of them on the same home purchase. The Help to Buy ISA closed to new accounts on 30 November 2019 but existing accounts still earn the bonus until 1 December 2030.

Is the £450,000 cap going to rise?

The cap has been £450,000 since 2017. Various campaigns have called for it to rise with house prices but it has not changed as of May 2026.

Eligibility · Lifetime ISA

Am I eligible for a Lifetime ISA?

In short. You can open a Lifetime ISA if you're 18–39 and a UK resident. Pay in up to £4,000 a year (counts towards the £20,000 ISA allowance) and get a 25% government bonus — up to £1,000 a year — to use for a first home (under £450,000) or after age 60.

LISAs are aimed at first-time buyers and long-term retirement saving. The 25% bonus is generous, but withdrawing for any other reason costs a 25% penalty — which can leave you worse off than you put in.

Last reviewed: 26 May 2026

·Amount: 25% bonus on contributions, up to £1,000/year. Lifetime maximum bonus around £33,000 (if paying £4,000/yr from 18 to 50)

You likely qualify if…

You're aged 18 to 39 when you open the account
You're a UK resident (or Crown servant / spouse)
First-home withdrawals only on first-ever home purchase, property under £450,000
You can keep paying in until age 50 and the bonus applies until then

You likely don't if…

You're under 18 or 40+ (cannot open new)
You're buying a home over £450,000 (would forfeit the bonus)
You already own a UK or overseas home (not 'first-time' buyer)
You need the money soon for non-qualifying reasons — the 25% penalty applies

How to check and claim

01Current eligibility rules are at gov.uk/lifetime-isa
02LISAs come in Cash and Stocks & Shares forms; only a small number of UK providers offer Cash LISAs
03From age 50, no further contributions can be made — existing LISA pots continue to earn interest or investment growth

FAQ

What is the 25% LISA withdrawal penalty?: Withdrawing for any reason other than first home, age 60+ or terminal illness costs a 25% government charge. This is on the full withdrawal — including your own money — so a £4,000 + £1,000 bonus pot withdrawn early returns just £3,750, less than you paid in.
Can I use a LISA alongside a Help to Buy ISA?: You can hold both, but you can only use the bonus from one of them on the same home purchase. The Help to Buy ISA closed to new accounts on 30 November 2019 but existing accounts still earn the bonus until 1 December 2030.
Is the £450,000 cap going to rise?: The cap has been £450,000 since 2017. Various campaigns have called for it to rise with house prices but it has not changed as of May 2026.

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