Lifetime ISA Over £450,000: The New 20% Charge and Your Stamp Duty
The Autumn Budget 2026 changed the Lifetime ISA rules for first-time buyers. From 29 October 2026, you can use a Lifetime ISA towards a first home above the £450,000 price cap and pay a reduced 20% withdrawal charge instead of 25%. This matters most between £450,000 and £500,000, where you can still get first-time buyer stamp duty relief.
What the 20% Charge Means in Practice
Suppose you paid in £20,000 and received a £5,000 government bonus, giving a £25,000 balance before any growth:
| Withdrawal charge | Charge on £25,000 | You receive |
|---|---|---|
| 25% (still applies to other unauthorised withdrawals) | £6,250 | £18,750 |
| 20% (first home above £450,000) | £5,000 | £20,000 |
At 20%, you lose the bonus but get your own contributions back. At 25%, you would have lost part of your own money as well. A purchase at or below £450,000 that meets the rules avoids the charge altogether.
Two Different Limits
- £450,000: the Lifetime ISA property price cap.
- £500,000: the limit for first-time buyer SDLT relief in England and Northern Ireland.
The caps are separate, so a home at £475,000 can lose the Lifetime ISA bonus while keeping stamp duty relief:
| Price | First-time buyer SDLT |
|---|---|
| £450,000 | £7,500 |
| £475,000 | £8,750 |
| £500,000 | £10,000 |
| £510,000 | £15,500 |
The bill jumps at £510,000 because relief is lost completely above £500,000.
Worked Example: £450,000 or £475,000?
With the £25,000 balance above, buying at £475,000 rather than £450,000 costs an extra £5,000 in lost bonus, plus £1,250 more SDLT. That is £6,250 on top of the higher price, so it is worth factoring in when you negotiate.
What About the First Time Buyer ISA?
The new First Time Buyer ISA replaces the Lifetime ISA for new savers from April 2029:
- Up to £4,000 a year, with a 25% government bonus paid on withdrawal.
- The bonus is capped at £20,000.
- It is for a first home worth up to £450,000.
- There is no upper age limit.
If you already have a Lifetime ISA, you can continue contributing and using it under the current rules.
Scotland and Wales: SDLT limits do not apply there. Scotland's first-time buyer relief has no price cap, and Wales has no first-time buyer relief, so check the LBTT or LTT result in our calculator.