More than the bonus gave. The charge applies to money that already contains the bonus, so the loss lands on your own contributions — worked in words.
More than the bonus gave you — that is how the published arithmetic lands, not a mistake on your statement. The government adds 25% to what you pay in; an unauthorised withdrawal is charged 25% of what you take out, and what you take out already contains the bonus. Work one hundred pounds through it: £100 paid in becomes £125.00 with the bonus; the charge takes £31.25 of that, leaving £93.75. The bonus is gone and £6.25 of your own money went with it — a 6.25% loss on what you contributed, before any growth enters it. The Lifetime ISA calculator runs your own pot through both endings.
| Tax/source year | 2026/27 |
|---|---|
| Region | UK-wide: savings interest is taxed on the UK bands and thresholds in every UK nation, including for Scottish taxpayers |
| Account rates | Never assumed. Any interest rate in a savings calculation is an input you set, stated beside the result. |
| Your other income | Wages and pension income decide how much Personal Allowance and starting rate are left for interest, and which Personal Savings Allowance band applies. |
|---|---|
| The interest itself | Interest counts towards the income that sets your band, so a large interest year can shrink the allowance that was meant to cover it. |
| The account's wrapper | The same balance at the same rate is taxed outside an ISA and untouched inside one; the wrapper, not the rate, decides whether the allowances are needed. |
| Run your own figures on the savings hub | calculator next step |
|---|---|
| Review calculation sources and methodology | source context |
| What is not decided here | PayBreakdown does not decide payroll correctness, lender approval, benefit entitlement or employer compliance, and does not give regulated financial, mortgage, debt, tax, payroll or legal advice. |
|---|
Three exits escape the charge: a first home, where the property costs no more than £450,000 and your first payment into the account is at least 12 months behind you; reaching 60; and terminal illness with under 12 months to live. Everything else — emergencies included, and transfers handled wrongly included — meets the full charge on the way out. The arithmetic above is the price of early access, and it applies however good the reason feels.
The charge comes out of the withdrawal, so to end up holding a given amount you must withdraw more than it. On GOV.UK's example pot of £1,000, needing £120 means withdrawing £160 — £40 of it is the charge — a third more than the amount needed, and the calculator's withdrawal figures show the same grossing-up for your own pot. A partial emergency raid is charged at the same rate as a full one; the charge scales with what you take, not why.
This is educational guidance on how UK pay and tax work. It does not decide payroll correctness, HMRC treatment, lender approval, benefit entitlement or employment rights, and it is not regulated financial advice. Where a figure matters, check it against your payslip, your HMRC account, or the official guidance linked above.
No — and GOV.UK's own worked example shows it: £800 paid in, with a £200 bonus, makes a £1,000 pot; a full unauthorised withdrawal is charged £250 and returns £750 — £50 less than went in. The charge applies to money that already contains the bonus, which is where the extra loss comes from.
Moving it to another Lifetime ISA through the providers carries no charge. Transferring it to any other type of ISA before 60 is treated like a withdrawal and charged — as is taking the money out yourself to move it, which is one of the easier ways to meet the charge by accident.
Last updated 2026-08-28. Checked by Sean Elsmore. Rates last checked against GOV.UK on 2026-08-07. Estimates are for planning and should be checked against official records where the decision matters.