Martin Lewis has issued an urgent warning to everyone aged 18 to 39: deposit at least £1 into a Lifetime ISA (LISA) now, before the government closes it to new applicants. The Labour government is consulting on replacing the LISA with a new First Time Buyer ISA, meaning the window to open one is limited.
What Is a Lifetime ISA?
A LISA is a tax-free savings account for under-40s, designed to help save for a first home (up to £450,000) or retirement. The government adds a 25% bonus on contributions, up to £4,000 per tax year – giving you up to £1,000 free annually.
Why You Must Act Now
Speaking on his ITV show, Lewis explained: "This is an important warning for anybody aged 18 to 39. If you do not have a Lifetime ISA, get £1 in one now. That's because the LISA is a strange savings account that gives you a 25% boost." He stressed that once the government replaces it, the LISA will be closed to new applicants. However, existing accounts – even with just £1 – can continue to be used.
What the Government Plans
The consultation proposes a new First Time Buyer ISA. Lewis noted: "What they're suggesting is for first time buyers, you'll be able to get the bonus on a LISA and the new First Time Buyer ISA. And for retirement savings, there won't be any equivalent."
Retirement Savings: A Key Consideration
While the LISA for retirement is generally not as good as a workplace pension, Lewis highlighted exceptions: "For example, you can no longer contribute to your workplace pension, or you're a self-employed basic rate taxpayer, and we don't know what you'll be in 10 years time. But putting a £1 in now means you'll have the facility to use it in 10 years if you need it."
Impact on First-Time Buyers
The LISA's 25% bonus is a significant boost for first-time buyers saving for a deposit. With the new ISA potentially offering different terms, having both accounts could maximise benefits. Lewis advised: "If you've already got one open, even with just a quid, you can continue to use it."
How to Open a LISA
You can open a LISA with any provider offering them – many banks and building societies do. Deposit at least £1 to secure the account. The deadline is uncertain, but acting now ensures you don't miss out.
Conclusion
Martin Lewis's warning is clear: a £1 deposit today could preserve access to thousands of pounds in government bonuses for your first home or retirement. Don't wait until it's too late.
