Lifetime ISA withdrawal

If you’re a UK resident aged 18–39, you can open an AJ Bell Lifetime ISA. And each year, you can pay in up to £4,000, earning a 25% bonus from the government. That means up to a £1,000-a-year boost to your savings.

There's a catch, though. You’ll pay a government penalty charge if you make a withdrawal from your Lifetime ISA outside of three specific circumstances. We'll explain all below…

Can you withdraw money from a Lifetime ISA?

You can withdraw money from your Lifetime ISA (LISA) without paying the penalty charge for the following reasons:

1. To buy your first home (as long as your Lifetime ISA has been open and funded for at least a year)

•   In the UK
•   Worth £450,000 or less
•   Purchased with a mortgage
•   Where you intend to live (not a buy-to-let)

2. You’re over 60 years old
3. You’re terminally ill

What happens if I withdraw from my Lifetime ISA at any other time?

If you are withdrawing money from your Lifetime ISA outside of these circumstances you will pay the government penalty charge. The 25% Lifetime ISA withdrawal penalty doesn’t just claw back the bonus, but it also applies to money you contributed. That means there’s a real chance you could end up with less than you put in.

How do I withdraw money from my Lifetime ISA for my house?

If you meet the conditions to buy a property with a Lifetime ISA withdrawal, you’ll first need to contact your solicitor or conveyancer. They’ll ask you to complete a declaration, before completing their own declaration and sending it to your Lifetime ISA provider.

If the declaration we receive is valid, we’ll send your withdrawal directly to your solicitor or conveyancer to help fund your house purchase. You’ll need to allow at least 10 working days for this money to transfer. Keep in mind that you can't use this money for additional costs, such as solicitor fees or furniture and fittings.

You'll also need to make sure you have the cash available to withdraw from your Lifetime ISA when your solicitor or conveyancer sends us the request.

If your purchase fails to complete within 90 days of the withdrawal, your solicitor or conveyancer must return all funds to your Lifetime ISA provider. Otherwise a withdrawal charge might apply.

After withdrawing some, or all, of your LISA to buy your first home, you can continue paying in – and receiving the government bonus – until age 50. From age 60, you’ll be able to withdraw the money you’ve saved, penalty-free. You’ll need to have a minimum balance of £100 to keep the account open.

What if I know I’ll pay a Lifetime ISA penalty, but I still want to take money out?

If you want to make a Lifetime ISA withdrawal from your AJ Bell pot, even if you know you’ll pay the withdrawal penalty, you need to log in to your account and select ‘Withdrawals’.

If you want to keep your Lifetime ISA open, you’ll need to maintain a balance of at least £100.

If you want to withdraw your entire Lifetime ISA balance, you’ll need to email withdrawal@ajbell.co.uk and close your account.

Keep in mind that you won’t be able to pay back in any money you withdraw from your Lifetime ISA if you’ve reached the annual ISA allowance limit for the current tax year.