Overview
- HMRC figures show the average of the 25 largest Lifetime ISA withdrawal charges rose to £13,500 in 2024–25, up from £10,600 the previous year.
- Across the year, 129,200 savers were hit with penalties as 87,000 used their accounts to buy a home, with total charges reaching £102 million and a typical penalty of about £790.
- Lifetime ISA funds can be taken without penalty only for a first-home purchase within the scheme rules, after age 60, or in cases of terminal illness, with other withdrawals incurring a 25% charge on the whole pot.
- Industry figures argue the unchanged £450,000 property cap is outdated—citing inflation that would put it near £605,000—and urge a review of the penalty design.
- The Treasury defends the scheme as supporting home ownership, saying it helped around 57,000 people onto the ladder last year, while CBI Economics estimates a £1 billion net fiscal boost with roughly 8% from penalties.