# How does the Lifetime ISA 25% withdrawal penalty work?

> Quick answer · Last updated 4 July 2026

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## In short

HMRC charges 25% of any unauthorised withdrawal — not just the government bonus. On £5,000 saved (£4,000 plus £1,000 bonus), withdrawing all unauthorised returns £3,750 — £250 less than you originally paid in.

The penalty applies to partial withdrawals too: taking £2,000 from a £5,000 pot costs £500, leaving £1,500.

Authorised withdrawals — first home up to £450,000 after 12 months, age 60+, or terminal illness — have no charge.

Provider-to-provider transfers are not withdrawals and do not trigger the penalty.

See Lifetime ISA withdrawal rules guide for conveyancer process on home purchases.

## Related

- [LISA withdrawal rules](https://moneyguide.org.uk/savings/lifetime-isa-withdrawal-rules/)
- [Lifetime ISA explained](https://moneyguide.org.uk/savings/lifetime-isa-explained/)

## Primary source

gov.uk/lifetime-isa

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.