PARLIAMENTARY WRITTEN QUESTION
Individual Savings Accounts: Fees and Charges (7 December 2022)

The Lifetime ISA is intended to support younger people saving for their first home or for later life by offering a generous government bonus on up to £4,000 of savings each year. These funds, including the government bonus, can be used to purchase a first home up to the value of £450,000, or can be withdrawn in the case of terminal illness or from age 60.

Any unauthorised withdrawals are subject to a 25% withdrawal charge. This recoups the government bonus, any interest or growth arising from it, and a proportion of the individual’s initial savings to discourage such withdrawals and protect the long-term nature of the account, which is intended to be used for the purposes set out above.

The Government has no current plans to remove or reduce the LISA withdrawal charge. Doing so would not be consistent with the LISA’s purpose as a long-term savings product.

However, the Government keeps all aspects of the savings tax regime under review.