Here’s the simple list, because I know you’re busy. Penalty-free: buying your first home (after 12 months), turning 60, terminal illness, or disability. Penalty (25%): literally anything else — a car, a wedding, a pet llama, a spontaneous trip to Vegas.
One more thing: you can transfer your Lifetime ISA to another provider without penalties. That’s not a withdrawal; it’s a move. Just make sure you do a direct transfer (don’t take the money out yourself), or the penalty will apply. It’s a boring admin detail, but it saves you £1,250 in pain.
Oh, and for the love of your finances, do not use a Lifetime ISA for short-term savings. It’s a trap. It’s wonderful for a house or retirement, but for “maybe I’ll need this cash in five years”? No. Use a normal ISA or a high-interest savings account instead. Your future self will thank you.
So, Dave is stuck with his car, but he’s wiser now. And you? You’ve been warned. Withdraw early only if you fancy losing a chunk of your own hard-earned cash to the taxman. Otherwise, wait until 60 or buy that house. Simple as that.
