A simple £1 payment today could prove valuable years down the line, according to Martin Lewis. The Money Saving Expert says anyone aged between 18 and 39 should consider taking action now amid uncertainty over the future of Lifetime ISAs. Speaking on ITV’s This Morning, Lewis urged anyone eligible for a Lifetime ISA (LISA) to open one with a minimum deposit. He explained that some providers, including Moneybox and Plum, allow people to open an account with as little as £1. Lewis said: “Aged 18
to 39, if you don’t have a Lifetime ISA, put a quid in it. You need to do more reading whether you should be actually using it and putting real money in, but the big warning, one pound. “I want everyone aged 18 to 39 to have one pound in a Lifetime ISA so that if it becomes useful to you in future when you can no longer open it, you have the facility.” The warning comes after the government launched a review of the
UK’s ISA system, prompting speculation over whether Lifetime ISAs could be reformed in the future. Lewis said the current rules could change “sometime next year”, meaning those who wait may miss the chance to open an account if eligibility rules are altered. According to GOV.UK, you can only open a Lifetime ISA if you’re aged between 18 and 39. Once you’ve opened one, you can continue paying into it until the age of 50, provided the account was set up while you were eligible. GOV.UK
says savers can pay in up to £4,000 each tax year and receive a 25 per cent government bonus, worth up to £1,000 annually. The money can be used towards buying a first home worth up to £450,000 or withdrawn after the age of 60. Money can also be withdrawn if someone is terminally ill. However, GOV.UK warns that taking money out for any other reason usually triggers a 25 per cent withdrawal charge, meaning savers could receive back less than they originally paid in.
Lewis acknowledged this during the interview, pointing out that someone opening an account with just £1 would risk losing only around 6.25p if they later decided to withdraw the money. He argued that was a small price to pay for securing access to the account should it prove useful in future. He also highlighted another major benefit of opening a Lifetime ISA sooner rather than later. To qualify for the Government bonus when buying your first home, the account must have been open for at
least 12 months. Lewis said: “To use a Lifetime ISA on a first-time property, it has to be open a year. So if you put a quid in now and you suddenly decide you’re buying a house next year, you could then put four grand in and you get the £1,000 bonus. “But if you only started to open it next year, you couldn’t do that. So there’s another reason for having money in there.”
Martin Lewis, Lifetime ISA, ITV This Morning, Money Saving Expert, ISA review, Moneybox, Plum, first home bonus, 12 months
So they want you to gamble a quid? Great advice as always.
Wait I thought you had to put in like thousands or it’s pointless. £1 just to “have access” sounds kinda scammy? But also could be smart if the rules change next year.
If providers like Moneybox and Plum will let you open it for £1 then why not, right. But the bit about withdrawing and losing 6p is still annoying, like you’re paying to play. Also does this affect people already holding cash ISAs? I’m confused.
UK gov keeps changing stuff and everyone’s like “just deposit £1” like that fixes it. Next year they’ll probably scrap it or move the goalposts again. Meanwhile I can’t even afford to save, but sure, put a quid in and hope for a first home like it’s lottery tickets.