Around 45,000 Lifetime Isa (Lisa) savers were hit with unauthorised withdrawal charges more than once in 2024–25, according to HM Revenue and Customs (HMRC) figures.
The figure, which was rounded to the nearest 100, was obtained by money app Plum following a freedom of information (FOI) request. HMRC’s response showed the average saver who was penalised more than once in this way in 2024-25 lost around £760 that year.
Charge brackets and cumulative penalties
Around 60 savers faced charges adding up to £8,000-plus in the tax year 2024-25, while around 60 others incurred charges of £7,000 to £7,999. The most common charge bracket, among those hit with charges multiple times, was for charges of up to £999, with around 33,530 savers in this bracket.
Asked by Plum about the average of the top 25 cumulative penalties per individual who was penalised more than once within the same tax year, HMRC said this was £11,000 in 2024-25, rounded to the nearest £100.
How Lifetime Isas work
Lifetime Isas enable people to save for their first home or their retirement in the same pot and receive a boost from a Government bonus. A 25% bonus is added to savings, up to a maximum of £1,000 per year. But a charge of 25% can apply if someone makes an unauthorised withdrawal, which may happen in cases where someone is aged under 60 and not withdrawing the money for their first home.
Rules around Lifetime Isas have previously been criticised for being too restrictive, for example, the first home must cost £450,000 or less.
Broader figures and new product
Figures previously released by HMRC in September show £118,985,000 in withdrawal charges was recorded for Lifetime Isas in 2025-26. Some 154,100 people made unauthorised withdrawals in that year. The average withdrawal value for a house purchase was £15,407 for the tax year 2025-26.
Lifetime Isas launched in 2017. A Government consultation seeking views on the design and implementation of a new first-time buyer Isa closed in August 2026. The new product will be focused on those buying a first home, with the dual purpose of the Lifetime Isa having previously been criticised. Once available, the new product will be offered in place of the Lifetime Isa, but it is still possible to open a Lifetime Isa until the new product becomes available and, beyond that, account holders can keep saving into Lifetime Isas.
Rajan Lakhani, a personal finance expert at Plum, said: “What the data shows will anger many and focus minds on ensuring the new first-time buyer Isa is fit for purpose.” He added: “These are significant sums of money for first-time buyers who already face considerable obstacles to getting a foot on the housing ladder.”
Maike Currie, vice president of personal finance at PensionBee, said: “These figures expose a fundamental flaw in the Lifetime Isa. The Government gives you a 25% bonus for saving, but if life gets in the way, the withdrawal charge can claw back the bonus and take a slice of your own savings too.”
