LISA Withdrawal Rules: When Can You Access Your Money?

You can withdraw your entire LISA balance, contributions, government bonus, and any growth, tax-free for a first home purchase, provided the property costs £450,000 or less, you are a first-time buyer, you are buying with a mortgage, and at least 12 months have passed since your first payment into the account. Your conveyancer requests the funds directly from the provider, you cannot withdraw the cash yourself and then use it.

1. The property costs £450,000 or less.
2. You’re a first-time buyer, you have never owned a property anywhere in the world.
3. You’re buying with a mortgage (cash purchases don’t qualify).
4. At least 12 months have passed since your first payment into your LISA.
5. Your conveyancer (not you) requests the withdrawal directly from your LISA provider, you can’t withdraw the cash and then use it.

If you’re buying jointly and both of you have LISAs, you can each use your own LISA on the same purchase, but both of you must be first-time buyers. The eligibility rules that decide whether you can open an account at all, including the age cap of 40, are set out in the Lifetime ISA explained.

For bonus timing, see when the government pays your LISA bonus. The £450,000 cap is also a purchase-price cap, not a mortgage or deposit cap, so it is worth reading alongside how a mortgage works and how Stamp Duty works.

You can withdraw your full LISA balance, contributions, bonuses, and any growth, tax-free from your 60th birthday, for any reason. This is a common source of confusion: the LISA retirement access age is 60, not 55. Workplace pensions can currently be accessed from 55, rising to 57 on 6 April 2028, but the LISA has its own separate and higher age threshold. The differences between the two are set out in what a pension is and how it works.

From your 60th birthday, you can withdraw the full balance, contributions, bonuses, and any growth, tax-free, for any reason. You don’t need to be buying a home or retiring. You can take partial withdrawals or the full amount.

Between 40 and 59 there is no charge-free exit at all unless you are buying a qualifying first home or have a terminal diagnosis. Money taken out for an emergency in that window is charged at 25% of the amount withdrawn, which is why the LISA behaves very differently from an easy-access account or a normal cash ISA. How the LISA sits alongside those other wrappers is covered in does a Lifetime ISA count towards your ISA allowance.

If you withdraw outside a permitted circumstance, your provider deducts a 25% charge from the total amount withdrawn, your contributions plus the government bonus. Because the penalty is calculated on the inflated total, you can receive back less than you originally paid in. For example, contributing £4,000, receiving a £1,000 bonus (total £5,000), then withdrawing early results in a £1,250 deduction, leaving just £3,750.

Example: You save £4,000. The 25% bonus adds £1,000. Total balance: £5,000. You withdraw early. The 25% penalty on £5,000 = £1,250. Amount returned: £3,750, that’s £250 less than the £4,000 you paid in. For a stocks-and-shares LISA with investment growth, the penalty base is even larger.

The charge was temporarily reduced to 20% from 6 March 2020 to 5 April 2021 as a COVID measure. That reduction expired and the rate has been 25% ever since. It is still 25% in the 2026/27 tax year.

The only exception besides the qualifying home purchase and retirement access is terminal illness, in that case, you can withdraw everything penalty-free at any age.

Because the charge applies to the whole balance rather than just the government’s share, the money you get back is not simply your own contributions. It is worth pairing this section with the LISA contribution limits guide, since every pound you pay in is a pound that becomes subject to these rules until one of the three exits applies.

Not yet, and not in the 2026/27 tax year. The charge is 25% today and no change to it has been legislated.

What has happened is a consultation. On 22 June 2026 the government published proposals for a First Time Buyer ISA, which it says would be offered in place of the Lifetime ISA. As proposed, the new account would pay its bonus at the point of purchase rather than up front, would have no withdrawal charge, and would have no upper age limit. The property caps for the FTB ISA, the Lifetime ISA and the Help to Buy ISA would be aligned. The consultation closed on 18 August 2026.

The bonus rate and contribution limits for the proposed account are to be announced at a future fiscal event, and no start date has been set. Until then, the Lifetime ISA can still be opened, existing holders can keep saving under the current rules, and any withdrawal outside the three permitted routes still attracts the 25% charge described above.