45,000 Lifetime Isa savers hit more than once in a year with withdrawal charges

With HMRC announcing that 45,000 Lifetime Isa (Lisa) savers were hit with unauthorised withdrawal charges more than once in 2024–25, Maike Currie, vice president of personal finance at PensionBee, argues that the figure highlights flaws with the product that need fixing.

She said: “These figures expose a fundamental flaw in the Lifetime ISA. The Government gives you a 25 per cent 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.

“Yet a record 87,250 LISA holders used the product to buy their first home in the 2024/25 tax year, up a record 54 per cent in a year. This isn’t a product that has failed, but it does have flaws that need fixing.

“Instead, the proposed replacement would only add the Government bonus when you buy, losing the potential growth on that money while you save, and the retirement option disappears altogether. There are far less benefits for the saver. The LISA needs repairing, not replacing. Fix the penalty and the outdated £450,000 property cap, but keep what works.”