A lower Lifetime ISA withdrawal charge applies from 29 October 2026 when a saver buys a first home costing more than £450,000 and meets the scheme's other purchase conditions. The charge falls from 25% to 20%.
The measure was announced in the Budget on 28 October. The amending regulations apply to withdrawals made on or after 29 October. It concerns qualifying home purchases across the UK.
What the change means for your deposit
HMRC's updated withdrawal guidance confirms that eligible purchases at £450,000 or less remain charge-free. The charge-free price cap has not increased. Other unauthorised withdrawals still attract a 25% charge.
For a simple illustration, a £20,000 gross withdrawal subject to the new 20% rate leaves £16,000 for the purchase after a £4,000 charge. At 25%, the same gross withdrawal would leave £15,000. This arithmetic excludes any separate fees or changes in investment value; it is not a guarantee of the amount your account will provide.
Check the conditions and payment route
The first-home withdrawal guidance still requires qualifying first-buyer status, a UK property intended as the buyer's only or main home, a qualifying mortgage and at least 12 months since the first Lifetime ISA payment. Buy-to-let and connected-person mortgages do not qualify. Completion is normally expected within 90 days of withdrawing the funds, with permitted extensions.
Ask your provider and conveyancer to confirm eligibility, the charge, the net amount available and processing times before relying on these savings for a purchase. The provider needs the required declarations and pays the remaining funds directly to the conveyancer after deducting the charge. Arrange that process rather than making an ordinary withdrawal into your bank account.
Use the confirmed net figure in your deposit and upfront-cost plan. Keep legal fees, surveys and removals separately in your moving budget; the account balance before the charge is not all available to spend.