Overview

• HMRC’s latest study reports that 11% of Lifetime ISA holders withdrew early and were hit by the 25% charge, with 86% aware they would lose the bonus and part of their contributions.
• FOI data reveal severe cases with average penalties of £10,600 on £42,300 withdrawals, including nearly 1,000 charged exactly £1,000 and more than 1,300 facing £5,000 or higher.
• The research shows account holders are split between saving for a first home and for retirement, while only 7% say they aimed to do both.
• An unchanged £450,000 first‑home price cap and a holder base skewed toward higher earners in London and the South East constrain who the product helps.
• Experts and MPs call for the Lifetime ISA to be central to the Treasury’s ISA consultation and for an overhaul of withdrawal rules, with no policy changes confirmed yet.