Money expert Martin Lewis has urged households to put £1 into a bank account now before a government rule change on ISAs.
Returning on the latest episode of The Martin Lewis Podcast on BBC Sounds and Spotify, Martin urged those aged between 18 and 39 to put £1 into a Lifetime ISA account now, because of a consultation on plans to change LISA and ISA rules.
The financial guru explained that the Lifetime ISA, which currently allows adults aged under 40 to save for a house or retirement with a £1,000 per year free cash bonus from government, could be axed and replaced with a new ISA instead.
The First Time Buyer ISA would only be for buying a house and could not be used to save for retirement instead, in a change to the current rules.
But those who open a LISA now could potentially still open the new FTB ISA as well when it’s launched.
Martin Lewis said: “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. You can put up to £4,000 a year in it.
“And the state will add a grand, either to use towards your first property as long as it costs under £450,000, or to use towards retirement savings once you’re aged 60.
“But the government is consulting on replacing it with a new first time buyers ISA.
“When they do, they’ll close the LISA down to new applicants.
“However, if you’ve already got one open, even with just a quid, you can continue to use it.
“And that’s important, because 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.”
Martin went on to add that the LISA for retirement savings ‘isn’t normally as good’ as a workplace pension, but that in some circumstances it can be useful, such as if you’re self employed or can no longer contribute to your workplace pension.
The Martin Lewis Podcast from Wednesday, June 25 is still available to stream on BBC Sounds, Spotify and Apple Music.