Jade's Lifetime ISA holds £15,000: £12,000 she paid in and £3,000 of government bonus. She is buying her first home for £480,000. If she withdraws the whole fund for the purchase, how much does she receive?
A Lifetime ISA can be used penalty-free only for a first home costing £450,000 or less. Above that, the withdrawal is unauthorised and a 25% charge applies: £15,000 × 25% = £3,750, leaving £11,250 (gov.uk Lifetime ISA, checked 11 Oct 2026). That is £750 less than she paid in, because the charge takes the bonus plus 6.25% of her own money. £12,000 assumes only the bonus is lost, and £13,500 uses a 10% charge.
Thinking the withdrawal charge only takes back the bonus.
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