You can withdraw money from your Lifetime ISA (LISA) to fund the purchase of your first home, as long as it’s worth £450,000 or less, and you’re buying with a mortgage.
You can also withdraw money from your Lifetime ISA when you’re 60 or older. If you withdraw cash from your LISA for any other reason, except in the case of terminal illness, you’ll have to pay a 25% government withdrawal charge. This means that for every £100 you withdraw (the £80 you put in plus the £20 bonus), £25 would be deducted and you’d only get back £75 – less than the £80 you put in.
Special rules apply to withdrawals made in the 2017/18 tax year. It is possible to withdraw all the funds from your Lifetime ISA - this means your Lifetime ISA will be closed. As you will not have received the government bonus you won’t have to pay the government withdrawal charge. However, you are not able to withdraw part of the monies from your Lifetime ISA in the current tax year.