You get a 25% uplift on the way in, so there is a penalty, but more like 5%. No penalty if you use the money to buy a first house or at (I think) 60 when it’s basically a pension withdrawal.
It’s a withdrawal from savings, which is quite an important distinction from a pension withdrawal for tax purposes!!
Sure, but I’d not regard that as emergency use. For my money, emergency funds should be as frictionless as possible. 
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Good point. It’s a pension when you pay in (i.e. the tax relief bit) but an ISA when you pay out (so no pension taxation).
I’m now feeling very hard done by through being too old for one 
But if your stocks grow sufficiently there’s no penalty, right? Like if you start at 4000 input, your stocks end up at 7000 and then you take a 25% penalty. You leave with 5250, which is >4000.
So it’s definitely a removal of the bonus and a loss of some of the gains, but it’s not a total loss?
My understanding is that the penalty is applied to what you take out. So, if you put in £4000 it would be upped to £5000. If you then took out £1000, they’d charge you £250 on the £1000.
Bit different if it went up from capital gains. So if the £4000 went to £8000 and you took out £4000 they’d charge you £1000 but you’d still have £4000 in the account.
The penalty is the extra 5% that I don’t think you should have to pay, but at the moment you do, unless the withdrawal is to buy a first house or you’re over 60.
PS Nobody with a LISA has hit 60 yet and worth noting that tax rules can and do change.
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I think LISA should be standardised with ISA rules, you can only put £4000 in a year so I don’t get why there’s a penalty to withdraw honestly (aside from the bonus, which should probably have a “if funds are withdrawn within 12 months the bonus is withdrawn” term unless you can prove financial hardship).
If the current government were to standardise it, I think you’d find the bonus gone and it just becoming an ordinary ISA.
LISA was intended to get younger people saving for a house or pension, hence the tax relief. Similar to help to buy in concept.
You’d have uproar if you could get away with no penalty after only 12 months. After all, why should a 40 year old be able to withdraw from what’s essentially a pension when a 41 year old couldn’t? Calling it an ISA was really misleading because it isn’t really.
At that point I guess I’d just move it over to my T212 S&S ISA.
Useless because any place I’d want to buy is over that. If it weren’t, I’d be buying it through a company as a buy to let with every intention to not live in it long-term.
Making it a little difficult actually because I am delaying taking the money out, but I know I won’t find a house I want for under £450,000 and probably won’t be able to afford one for £450,000 let alone more.
Depends where you want to buy. Probably useless in London/SE, but reasonable houses in other areas weigh in from maybe £50k. Salaries are similarly lower though.
My hometown is in the South West (technically, but it’s between London and Cardiff). I definitely wouldn’t find a house for £50,000 but to begin with I would rather live abroad than live outside of London.
Rest of the United Kingdom with an exception to Bristol and Manchester (to me) aren’t worth living in. Bristol would be a stretch these days and Manchester is too far too.
Basically, I’ve already decided to withdraw it I’m just letting it go high enough to where I don’t take a net penalty (capital growth should offset the penalty more than the penalty is worth).
For comparison, said £50k house would be a two bedroom terrace in decent area of the city. House opposite me went for £500k about four or five years back but it’s a five bedroom detached, double garage, fair bit of land.
Happy to report that Tembo have released a new version of the app which fixes many of the issues I reported. It looks great on both screens of my Fold3 now.
Tembo are now matching the base rate at 4.75%. Excellent news!
They’ve now gone a step further and are actually ahead of the base rate, matching Moneybox’s ‘headline rate’ of 4.8% but with no fixed end date.
Meanwhile they’ve also launched a straight-forward cash ISA at the same rate. The app is much improved from where it was last Summer. My cash back from the July transfer-in promotion just paid out, ahead of schedule.
They’ve made themselves a bit of a ‘no brainer recommendation’ for anyone looking for a Cash LISA, IMHO.