Martin Lewis issues one month ISA warning as first-time buyers could miss out on £1,000 free cash
MARTIN Lewis has issued a one month warning for first-time buyers who could miss out on £1,000 free cash.
The money saving expert returned to our screens last night for the 13th episode of this season’s Martin Lewis Money Show.
Martin explained during the show that savers have just one month left to use their 2022/23 tax year ISA allowance by April 5.
Each tax year, people get an allowance where you can put money away to protect it from being taxed and get certain perks.
Martin said: “This is a one month ISA warning.
“You need to use your allowance by the end of the tax year, April 5, or you lose it.”
One of the main ISAs with the one month deadline is a Lifetime ISA for first-time buyers.
A Lifetime ISA (LISA) can be opened by anyone aged between 18 and 39.
You can use it to save up to £4,000 a year, towards either a first home costing up to £450,000 or for retirement.
Savers with a LISA will get a bonus of up to £1,000 a year on top – or 25% of whatever you put in.
“So, if you haven’t maxed it out this year or you haven’t opened one you’ve got time left to do it,” Martin said.
What are the best rates for Lifetime ISAs currently?
As part of his MoneySavingExpert newsletter this week, Martin also revealed the best LISA deals right now.
The Moneybox LISA offers a 3.5% rate and interest is paid monthly, it requires a minimum of £1 put in.
The Bath Building Society requires a minimum of £500 to open and is also offering a 3.19% rate, interest is paid annually.
What other ISAs have a one month warning?
During the segment Martin also explained how people with Cash ISAs also only have a month left to act.
Martin said: “Now a Cash ISA is just a savings account where the interest is NEVER taxed.
“You can put up to £20,000 in each year and once it’s in it’s never taxed.”
He explained that is savers put £20,000 in now, and on April 6 put in another £20,000 and then in a year’s time another £20,000 and you would have £60,000 plus interest protected from tax.
Of course this isn’t possible for everyone, and Martin did make it clear that these kinds of ISAs are best for big savers.
He said if you only for £10 to £10,000 it’s not really worth it.
This is because most people don’t pay tax on savings anyway, you can earn £1,000 of interest tax free under the personal savings allowance if you’re a 20% tax payer and £500 if you’re a higher rate 40% tax payer.
So, unless you have a lot of savings you won’t earn that anyway and normal savings accounts’ rates are higher so you would earn more in those.
He said: “For those for whom a cash ISA is worth it Easy Access Cash ISA Cynergy is 3.05% – put your money in and take it out when you like.”
Martin also recommended for people looking for a fixed Cash ISA the Shawbrook 4.06%.
The money expert then advised that one of the best fixed ISAs on the market currently is Barclays, which offers a 4% interest rate and three withdrawals allowed.
“So if you want a fix you can withdraw from it’s decent,” Martin added.
He went on to say that the deadline next month also applies for Stocks and Shares ISAs and Junior ISAs too.
Junior ISAs (JISAs) let you save or invest up to £9,000 this tax-year, with the cash locked away until the child turns 18.
Meanwhile, The Sun recently spoke to a couple who withdrew money from their Lifetime Isa too soon, which meant they forfeited their 25% government bonus.
Plus, Cash ISAs are the “comeback kings of 2023”, according to Sarah Coles, Hargreaves Lansdown’s personal finance expert.
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