THOUSANDS of savers have been issued fines of up to £11,000 for withdrawing their own money from a special bank account.

Fresh figures have revealed that some 74,000 Lifetime ISA (LISA) holders were charged penalties in the 2022-23 year.

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The damming discovery comes amid fresh calls for the government to scrap LISA penalties for first-time buyers in the Autumn Budget.

The LISA was launched in April 2017 and is a savings product which is designed to help people save for either a first home or retirement.

The account is tax-free and anyone aged between 18-39 can open one.

You can save up to £4,000 a year and the government will then add a 25% bonus on top.

However, the only way you can make an authorised withdrawal from your LISA is if you are buying a house or you are terminally ill.

If you withdraw for any other reason you are slapped with a 25% fine, which is known as an “unauthorised withdrawal” penalty.

This does not mean you just pay the 25% government bonus back, but you also get a chunk of your own cash taken away as well.

For example, if you start with £800 in your LISA and earn a £200 bonus, you’ll have £1,000 in your account. 

But if you then withdraw the entire amount, you’ll have to pay a 25% charge of £250, leaving you with £750.

Data obtained from HMRC and published by money app Plum showed that in the 2022-23 tax year, the average of the top 25 penalties paid for unauthorised withdrawals was £11,000.

The average of the top 25 withdrawals made was £44,000.

The penalty has become a sore spot for many LISA holders in recent years, especially first-time buyers.

This is because LISA savers have to pay a 6.25% fine if they buy a home costing over £450,000 – a cap which has been frozen for seven years.

However, in some parts of England house prices are higher than the cap.

This includes London, where for example, the average house price in Barnet is £592,597, according to Land Registry figures covering July 2024.

Or outside of London in Cambridge, where the average property value is £487,493.

You can check out the list of the worst-impacted areas below.

Outside London:

• Brentwood – £467,357
• Buckinghamshire – £470,701
• Cambridge – £487,493
• Cotswold – £477,583
• Dacorum – £473,485
• Elmbridge – £679,303
• Epping Forest – £516,585
• Epsom & Ewell – £532,217
• Guildford – £516,489
• Hart – £461,532
• Hertsmere – £489,097
• Mole Valley – £544,223
• Oxford – £475,247
• Reigate & Banstead – £466,545
• Runnymede – £487,634
• Sevenoaks – £500,569
• South Oxfordshire – £496,562
• St Albans – £584,360
• Surrey – £511,001
• Surrey Heath – £452,888
• Tandridge – £519,884
• Three Rivers – £580,751
• Uttlesford – £467,814
• Waverley – £550,427
• Winchester – £491,931
• Windsor & Maidenhead – £572,410
• Woking – £475,214
• Wokingham – £483,259

London:

• Barnet – £592,587
• Brent – £513,133
• Bromley – £503,529
• Camden – £858,303
• City of London – £766,878
• Westminster – £904,355
• Ealing – £549,466
• Enfield – £454,050
• Greenwich – £456,565
• Hackney – £563,111
• Hammersmith & Fulham – £797,032
• Haringey – £571,385
• Harrow – £512,447
• Hillingdon – £459,054
• Hounslow – £451,609
• Islington – £684,844
• Kensington & Chelsea – £1,164,140
• Kingston upon Thames – £546,943
• Lambeth – £535,066
• Lewisham – £460,621

What needs to be done?

Rajan Lakhani, a spokesman for Plum, is urging the government to scrap Lifetime ISA penalties for first-time buyers ahead of the upcoming budget.

He also is asking officials to raise the LISA ceiling should be raised from £450,000 to £600,000.

“The Chancellor has put home ownership at the centre of the Labour Party’s programme for Government,” he said.

He added: “That’s why it makes sense to index-link the Lifetime Isa ceiling from the time of its launch and bring in a new limit closer to £600,000.”

It comes as the freshly appointment Labour government are set to deliver their first budget this October.

All eyes remain fixed on what Chancellor Rachel Reeves will do to help first-time buyers, who have been bruised by a tough economic climate and rising costs.

A Treasury spokesperson said: “Decisions on tax are made in the round at the Budget.

“Across the vast majority of the country the average price for a first-time home remains below the £450,000 Lifetime Isa cap, and we are committed to building 1.5 million more homes so that people can turn the dream of owning a home into a reality.”

What other LISA pitfalls are there?

There are some other shortcomings to having a Lifetime ISA.

The LISA allowance has remained frozen at £4,000 since the product was first launched in 2017, which is restrictive.

So, savers trying to build up a deposit and save more than the maximum LISA allowance of £4,000 may also want to consider a regular ISA.

You can also only use a LISA for a property if you have never owned one.

This includes a share of inherited property or a home overseas.

Also, if you’re a first-time buyer purchasing with someone else, like a partner or friend, for example, they cannot have owned a property before.

Age is another deterrent for many savers.

If you reached the age of 40 on or before April 6, 2018, you won’t be eligible for a LISA

To read more about whether or not a Lifetime ISA is for you, check out our article here.

A MAJOR update has been issued after tens of thousands of married female retirees were underpaid the state pension due to a government error.

The Parliamentary Ombudsman confirmed this week that it will launch a full investigation into the issue.

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Failings in the old state pension system left potentially more than 100,000 married women without the payments they were due.

These women have been contacted and informed that a “detailed investigation” has begun into this group of complaints.

If successful, the Government could be forced to hand out hundreds of millions of pounds in state pension arrears to all of the women who missed out.

This could include thousands of women who died without ever being paid the correct pension.

Former Pensions Minister Sir Steve Webb criticised the previous system, calling it “archaic and sexist”.

“This is a major milestone in a long-running campaign for justice for thousands of married women,” he said.

“The fact that they did not know this was needed indicates a system which let them down and has cost them in many cases thousands of pounds through no fault of their own.”

These women did not ignore official correspondence and would clearly have made a claim had they realised it was needed one their husband retired, he added. 

Sir Steve estimates that some of these women will have lost out by £10,000 or more in the period since their husband retired.

How did the error happen?

Prior to a rule change in March 2008 married women could claim the state pension at age 60.

This was initially awarded purely based on their own National Insurance record, which showed how many years they had made contributions.

If they had spent time at home raising a family or had other gaps in their employment history then their state pension could be very low.

For many, this could be as little as 25% of the full basic pension.

But when their husband claimed his state pension married women could get an increase in the amount they would receive.

If their husband had made enough contributions then the amount of state pension they would receive could increase to as much as 60% of the full basic pension.

But this uplift only happened if they made a further state pension application once their husband retired.

Tens of thousands of married women assumed that because they had already applied for the state pension they would be paid the correct amount.

Those who did not make a second claim would remain on the low pension indefinitely.

If they found out about the potential uplift later they could only backdate their claim by one year, leaving them thousands of pounds out of pocket.

In cases seen by Sir Steve Webb some women potentially missed out on more than a decade of increased pension payments.

More shockingly still, many women were only notified of what they needed to do to claim if their husband ticked a box on his state pension pack.

Doing so would mean that two state pension claims forms were sent to him, one of which was to be given to his wife.

Failure of the husband to tick the box or to pass on the form to his wife would mean that she missed out.

Meanwhile, she could also be unfairly penalised if the DWP only sent one form rather than two.

When did the rule change?

The system was changed in March 2008 so that married women received a state pension uplift automatically without needing to make a further claim.

But women who had made a claim before 2008 did not benefit from the rule change.

During the investigation, the Ombudsman will ask the Department for Work and Pensions for all of the information available to married women when the letters were sent.

It will then share its preliminary findings with the DWP and those making a claim before it reaches a final recommendation.

What can I do about it?

You can contact the DWP directly and query whether you have been affected.

Another option is to use an online tool or advice site to see whether they can help.

An online tool launched by Sir Steve Webb on behalf of actuarial firm LCP can help married women check if they might be affected.

You can then contact the pension service to get your state pension entitlement reviewed.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

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FUEL prices could soar if the Middle East conflict escalates, drivers were warned last night.

The cost of oil climbed by around five per cent in just two days to $76 per barrel, as Israel vowed to retaliate against Iranian missile strikes.

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One option open to the Israeli military is to hit Iran’s oil refineries — which despite western sanctions still supply many countries worldwide.

Analysts said a major escalation could take the oil price to $100 a barrel — driving up pump costs for motorists.

The warning comes at a time when petrol prices here have been falling.

They were down 6.5p a litre in September, putting £3.60 back into drivers’ pockets every time they fill up a 55-litre tank.

Petrol is now 134.9p a litre and diesel 139.5p — marking one of the biggest price drops in 24 years, the RAC says.

A second threat to prices is the Budget on October 30.

Chancellor Rachel Reeves will have to decide whether to keep the current fuel duty freeze, as well as a 5p reduction brought in by the Tories.

The Sun’s Keep It Down campaign has saved drivers £90billion in tax over 14 years.

AA boss Edmund King said: “Global oil prices tend to increase with any geo-political uncertainty.

“The Government should avoid the temptation to hike fuel duty in the Budget as drivers and industry would face a double hit.”

Fawad Razaqzada, analyst at City Index, said: “The extent of Israel’s response to Iran will influence how much geopolitical risk markets factor in. Crude oil could rise another $5 in the next few days if we see further escalation in the conflict.”

Bjarne Schieldrop, chief commodities analyst at SEB, warned a major escalation in tensions could push oil prices to $100 a barrel.

And David Oxley, of Capital Economics, said such a rise could add 13p to the cost of a litre.

About a fifth of global oil comes from the Gulf region.

THE boss of JD Sports yesterday bristled at concerns the retailer was vulnerable to a slowdown in sales at supplier NIKE.

JD Sports — known as the King of Trainers — relies heavily on the popularity of new releases from the world’s biggest sporting brand to bring in customers.

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Nike’s sales slumped by ten per cent in the last quarter and the US firm’s profits were down more than a quarter to $1.1billion — the biggest fall since the pandemic.

Meanwhile JD Sports yesterday posted a 64 per cent drop in profits to £126.3million.

Regis Schultz, chief executive of the FTSE 100 retailer, accused journalists of “overplaying” the group’s exposure to Nike’s woes.

But he later admitted Nike’s Air Force One was still a best-seller.

A testy Mr Schultz insisted: “People overplay everything . . . we are a multi-brand retailer. We are doing what we do for a living, selling different brands.”

Asked about when he hoped Nike would be restored to full strength he said: “I think the demand is there so it will come.”

Nike has delayed investor meetings to give new boss Elliott Hill more time to turn things around.

Nike’s fall from favour comes amid rising competition from running shoe brands Hoka and ON while rival Adidas has been basking in the Samba and Gazelle trainer revival.

Nike’s finance chief said the company will be spending more in a bid to win back a share of the running market.

While JD Sports’ overall sales rose by 5.2 per cent in the 26 weeks to August this overwhelmingly came from new shops and acquisitions.

Sales at stores open for more than a year slowed to 0.7 per cent, despite higher prices.

Shares fell by 6 per cent to 140.35p yesterday, suggesting the City was not convinced by Mr Schultz’s claims that “everything is good” with the company.

In the UK, sales fell by 4.6 per cent to £1.2billion, which JD Sports blamed on an early Easter and an “unfavourable spring and early summer weather” which the firm said “dampened footfall and full-price demand” meaning shops had to discount more.

JD also said the Euros footie tournament had a negative impact on profits because selling replica kit has lower margins than its usual athleisure.

The drop in profits came after JD shut a warehouse in Derby. It also warned of a £20million hit from foreign exchange costs as a result of a stronger pound.

Top-line operating profits were 6.7 per cent higher at £451million.

Thames’ deadline extended

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THAMES WATER has received some much-needed breathing space after its banks agreed to extend an overdraft facility that was due to expire next week.

Sources told The Sun that a £530million revolving credit facility had been extended by lenders ahead of a deadline next Monday.

It comes as a group of 90 creditors, including big fund names Blackrock and Apollo, are working on a rescue plan for the troubled firm.

It would restructure £16billion of its debts — but only if another infrastructure investor can be persuaded to inject fresh cash, and regulator Ofwat signs off on plans to raise customer bills.

Despite the credit extension, Thames Water is still racing against the clock as it has warned it will run out of cash.

A failure would mean it is taken into temporary state ownership — via a special administration regime to ensure that household services are still supplied.

Time for a cheque

BANKS could delay payments for up to three days in plans to help them investigate fraud.

The Government will argue today that upping the stalling time from 24 to 72 hours will allow for more time to block high-risk payments.

Some £460million last year was lost as fraudsters tricked people into giving them money, according to UK Finance.

City Minister Tulip Siddiq said: “We need to protect these people better.”

World of chaos

GEOPOLITICAL instability is the top threat to the financial system, according to a Bank of England poll of banks and investment firms.

Even before the latest escalation of conflict in the Middle East, a record 93 per cent named geopolitics as the No1 risk. Close behind were cyber attacks and a UK economic slowdown.

The Bank’s Financial Policy Committee warned stock markets could see a “sharp correction”, with risk for hedge funds increasing their bets on US government debt.

SHARES in Saga lifted almost 10 per cent yesterday after the over-50s group confirmed it was in partnership talks with Belgian insurance rival Ageas.

A tie-up could include an upfront payment which would help cut Saga’s debt pile.

BRITISH banks have been offering new and existing customers up to £200 free cash just in time for Christmas – here’s how you can claim.

More than four major banks have launched new schemes, allowing customers to pocket free cash.

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Lloyds revealed that users who switch to their Club Lloyds account can receive a whopping £200.

Nationwide Building Society is offering customers £175 to switch to its FlexDirect, FlexPlus or FlexAccount current accounts.

Switching bank accounts has never been easier thanks to the Current Account Switch Service (CASS).

Through the CASS, customers can pick their switch date and leave it to the banks to move any active direct debits to their new account.

Here is the full list of banks offering the best switch offers.

Lloyds

Lloyds has confirmed that customers who switch to their Club Lloyds account can receive a whopping £200.

Both new and existing customers can take advantage of the free cash offer available for those who switch between October 2 and December 10.

Those who switch to the Club Lloyds account can expect the £200 to be paid within three days.

To finalise the switch, customers can either scan the QR code available on the bank’s website or use the mobile app.

Once completed, Club Lloyds customers will be able to select from a range of perks, including a 12-month Disney+ subscription, a choice of Vue or Odeon cinema tickets, a magazine subscription, or a Coffee Club and Gourmet Society membership.

Here are the details and costs of the Lloyds’ account.

Club Lloyds

• £3 monthly fee, waived each month that you pay in £2,000 or more.
• Earn credit interest on balances up to £5,000,  when you pay out two different direct debits each month.
• Choose a yearly benefit from: 12 months of Disney+, six x cinema tickets at ODEON or Vue cinemas, An annual Coffee Club and Gourmet Society membership, An annual magazine subscription.

Nationwide Building Society

Nationwide Building Society has launched a new offer of £175 to switch to its FlexDirect, FlexPlus or FlexAccount current accounts.

To get the free money, you must switch through the Current Account Switch Service (CASS).

It’s also giving account holders a £50 interest-free overdraft buffer to ease burden at what can be an expensive time.

First Direct

First Direct has confirmed that they have relaunched its popular cash switch incentive for anyone who opens a 1st Account.

Customers can receive a payment of up to £175 by using the Current Account Switch Service (CASS).

Users have to switch at least two direct debits or standing orders within 30 days of opening the account to qualify for the cash.

Switchers also need to add at least £1,000 into the account, register and log on to internet banking and use the debit card at least five times within 30 days of opening the account.

Customers who meet the criteria should expect the free bonus in their accounts by the 20th of the following month.

The bank revealed that new customers switching to their current account to first direct can expect several extra perks, including a £250 interest-free overdraft.

You won’t qualify for the switching incentive if you have previously held a First Direct product or opened an HSBC current account on or after January 1, 2018.

Customers moving across to the bank will also get access to a regular savings account paying 7% interest, one of the best deals around, as well as a 0% overdraft on the first £250.

How do I switch bank accounts?

SWITCHING bank accounts is a simple process and can usually be done through the Current Account Switch Service (CASS).

Dozens of high street banks and building societies are signed up – there’s a full list on CASS’ website.

Under the switching service, swapping banks should take seven working days.

You don’t have to remember to move direct debits across when moving, as this is done for you.

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All you have to do is apply for the new account you want, and the new bank will tell your existing one you’re moving.

There are a few things you can do before switching though, including choosing your switch date and transferring any old bank statements to your new account.

You should get in touch with your existing bank for any old statements.

When switching current accounts, consider what other perks might come with joining a specific bank or building society.

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Some banks offer 0% overdrafts up to a certain limit, and others might offer better rates on savings accounts.

And some banks offer free travel or mobile phone insurance with their current accounts – but these accounts might come with a monthly fee.

Co-operative Bank

The Co-operative Bank has announced eligible customers could receive up to £150.

The first £75 is given when a customer completes a switch to the bank.

Then, the bank is offering three monthly instalments of £25 – another £75 – to make up the £150.

Both new and existing customers can apply to switch to a current account to make themselves eligible for the payment.

Like any good offer, there are a few boxes to tick off before the big payment comes in.

Customers must apply for a Standard Current Account or Everyday Extra account.

To be eligible, customers must not have benefited from a switch incentive at The Co-operative Bank since 1 November 2022.

And to receive the first £75, customers need to follow a series of rules.

They are:

• Deposit a minimum of £1,000 into their new account (this includes balances transferred as part of the switch).
• Have 2 active Direct Debits.
• Make a minimum of 10 debit card or digital wallet transactions (pending payments will not count toward the fulfilment of this criteria).
• Register for our online and/or mobile banking service.
• Set up the debit card in a digital wallet (Apple Pay, Samsung Wallet or Google Pay).

That leaves the three £25 instalments – and there are some rules to claim them too.

Bankers need to deposit at least £1,000 into their account, have two direct debits and make a minimum of 10 debit card transactions.

Barclays

Barclays is offering £175 to new customers who switch before August 30.

The offer is only open to new customers who open a Barclays Bank Account or Premier Current Account.

To get the money, you must start a full switch by the deadline  – and complete it within 30 days.

The switch must include at least two active direct debits, and you need to pay £800 into your new bank account by August 30.

If you choose to open the sole Barclays Bank Account, you’ll need to join Blue Rewards, which costs £5 a month.

In return, you get Apple TV+ and MLS Season Pass subscriptions, you can earn up to 15% cashback with participating retailers and you get up to 5% interest on your savings with a Rainy Day Saver. 

The Premier Current Account is free, but has strict eligibility criteria.

To qualify, you need to either pay a gross annual income of at least £75,000 into the account, or have a total balance of at least £100,000 in savings, in Barclays UK investments, or in a mix of both.

You get access to all the same benefits as a Blue Rewards member, and can also choose to pay £12 a month to join the Avios Rewards programme.

You can read the full details and apply to switch on the Barclays website.

How to switch current accounts

Switching bank accounts can in most cases be done via the Current Account Switch Service (CASS).

Dozens of high street banks and building societies are signed up, including Barclays, First Direct, Lloyds, Monzo, Santander and TSB.

The full list of participating banks and building societies is on the CASS website.

All you have to do is apply for your desired new current account and the new bank will tell your existing one that you’re making the switch – then they will do the rest of the legwork.

Any direct debits are moved across for you, but there are a few things you can do before applying.

This includes choosing the date you switch and transferring any old bank statements to your new account.

You can get these by asking your existing bank.

Not interested in free cash?

Switching current accounts has long been an easy way to pocket free cash from banks luring in new customers.

However, these lucrative deals might not be for everyone.

But other perks including free travel insurance, interest-free overdrafts, and cashback, can also make shifting providers worthwhile.