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Lifetime ISA government withdrawal charges

When you open a Lifetime ISA there are some rules around how, when and what you can withdraw your money for.

Any withdrawals within the first 12 months of your first payment into a Lifetime ISA will incur a 25% government withdrawal charge, which means you would get back less than you paid in. After that, you can withdraw money to buy your first home, but for any other withdrawals before the age of 60, the government withdrawal charge will apply (unless you are diagnosed with a terminal illness).

How the charge is calculated

The government withdrawal charge only applies to the amount you withdraw. This is charged at 25%.

This means as well as returning the 25% government bonus, you'll also lose some of your own savings and will receive back less than you paid in.

An example of how the government charge is calculated

This example is for a non-house purchase withdrawal before the age of 60 and doesn't include any interest earned.

You open the account with £4,000
The government bonus is added £1,000
Total for 1st year £5,000
You make a chargeable withdrawal -£5,000
The government withdrawal charge is applied -£1,250
You receive back £3,750
You lose this much of your own savings -£250


Before deciding whether to make a chargeable withdrawal from your Lifetime ISA you should be aware that the Lifetime ISA is not a flexible ISA. This means you can't withdraw your money and replace it within the same tax year without affecting your Lifetime ISA allowance.

With this in mind, you will need to consider whether it is better to withdraw only what you need at any one time, rather than close your account fully. This could help you make the most of your 25% government bonus and continue to grow your account balance.

Some examples:

The £4,000 maximum annual deposit allowance will still apply so:

  • If you deposit £4,000 and withdraw it, you cannot make another Lifetime ISA deposit until the following tax year
  • If you deposit £1,000 and withdraw it, you can only deposit a further £3,000 this tax year

If you close your Lifetime ISA while there is a government bonus pending it will not be paid to you. If you want to ensure any pending government bonus is paid, you must keep at least £1 in your Lifetime ISA until the government bonus has been credited to your account.

Process to request a withdrawal

If you are outside of the 30-day cancellation period and wish to make a chargeable withdrawal follow the steps below:

  1. Log in to Skipton Online & initiate a web chat

    Please make sure you have to hand the account number and sort code for the account you'd like to transfer the funds into (the account must be a UK bank or building society account held in your own name).

  2. Confirm the withdrawal details

    You will be asked for the amount you want to withdraw or confirmation you want to close the account.

  3. Check the confirmation email

    During the web chat you will receive email confirmation of your request and details of any government withdrawal charge payable. The email will confirm details of how you provide acceptance of any government withdrawal charge or cancel your withdrawal request.

  4. Accept any charges

    You need to confirm to us your acceptance of any government withdrawal charge or cancel your withdrawal request.

  5. Receive funds

    Once we have received your acceptance we'll send the funds to the account you've specified and confirm timescales in the web chat.

Need more help?

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