Martin Lewis urges savers to put £1 in account now | Personal Finance | Finance

Martin Lewis is urging savers to put £1 into a Lifetime ISA (LISA) right now to bag a bonus payment of up to £1,000 per year.

A LISA is a savings account that can be opened by anyone aged between 18 and 39, and can be used to save towards either a first home or for retirement. Up to £4,000 can be put into the tax-free account every year until you reach 50, but you must make your first payment into the account before you’re 40. The government will then add a 25% bonus to your savings, up to a maximum of £1,000 per year. Plus, you’ll also earn interest on any money you save and that interest is tax-free.

In a post on X (formerly Twitter) on Friday, July 4, Martin Lewis urged anyone who falls within the eligible age group to open a LISA now and to put £1 into the account “as soon as possible”.

You must have had your LISA for a full year to be able to use it and to get the government bonus, so the sooner you open one the sooner you will qualify for up to £1,000 per year of free cash.

Speaking on The Martin Lewis Podcast this week, Martin said: “If you’re aged 18 to 39 and you’ve never owned a house, then get £1 in a Lifetime ISA now, assuming you don’t already have one.

“A Lifetime ISA is a savings product where you can save up to £4,000 a year and the state adds 25% on top towards a qualifying first home. But, there’s a rule that says it has to have been open a year before you can get that bonus.

“Now that bonus is worth up to £1,000 a year for you and just putting £1 in now, even if you’re not ready to use it, means when you are ready to use it the clock will have been ticking. You would have had it open a year so you’re perfectly eligible to suddenly go and get the bonus.”

You can hold cash or stocks and shares in your Lifetime ISA or have a combination of both, but once you turn 50 you won’t be able to pay into the account or earn the 25% bonus. But your account will stay open and your savings will still earn interest or investment returns. 

You can take your savings out of a LISA once you’re 60 or over, but if you withdraw your money or transfer the LISA to another type of ISA before 60 you’ll have to pay a 25% charge.

As such it pays to open an account early as it means you’ll be investing thousands of pounds into your future, and the longer you have the account, the more years you’ll be able to get the government bonus.

Martin added: “On your kid’s 18th birthday why not get them a LISA and put £1 in it. The LISA has its pros and it has its cons, there are some holes in it, and I’ll go through those all in detail in the podcast. But, it’s absolutely worth making sure you have the facility to have a LISA set up and running as quickly as possible. And if all goes wrong, the worst that can happen is you have to pay a 6p fine to take your £1 out at the end.”