Overview
- FOI responses to Plum, reported Oct 7–8, 2026, show about 45,000 people were charged unauthorised Lifetime ISA penalties more than once in 2024–25 and the average repeat‑penalised saver lost about £760 that year.
- HMRC breakdown shows the most common cumulative band for repeat penalties was up to £999 affecting roughly 33,530 people, while around 60 savers faced more than £8,000 and the top 25 average cumulative penalty was about £11,000.
- Separate HMRC figures for 2025–26 record roughly £119 million collected in withdrawal charges, about 154,100 unauthorised withdrawals and an average LISA withdrawal for a house purchase of £15,407.
- Lifetime ISAs carry a 25% unauthorised‑withdrawal charge that can claw back the government bonus and part of a saver’s own money, a rule critics say makes the product punitive and risky for people who need cash unexpectedly.
- The Treasury closed a consultation on a replacement first‑time buyer ISA in August 2026 that would focus on home purchases and drop the retirement element, but ministers have not yet published final rules and campaigners are pressing for changes to the penalty and the £450,000 property cap.