Martin Lewis has issued a warning over the regulations governing savings accounts. The consumer advocate shared a word of caution after a person told Mr Lewis they had been refused a service by their account provider.
The saver reached out to Mr Lewis on social media after he spoke about ISAs on his BBC podcast. The person enquired: "You suggested on your podcast that for the new tax year, we could put £20,000 of new money into our ISA, whilst also transferring £4,000 from last year's ISA to our LISA for the new tax year."
Understanding Lifetime ISAs
The LISA (Lifetime ISA) is a savings vehicle designed to help save towards purchasing your first home or as a retirement fund. You can access the money either to put towards your first property purchase or once you reach 60, otherwise a penalty applies. Savers can contribute up to £4,000 per tax year and receive a 25 per cent Government bonus on deposits, potentially earning you an additional £1,000 annually.
However, the person said they had attempted to transfer their LISA funds but were unsuccessful. They informed Mr Lewis: "I have tried and been denied with the following response, and am keen to get your thoughts." They provided a screenshot of a message from their LISA provider, after they had requested to transfer funds from their previous account over to them. The message explained that according to their previous provider's regulations, "you cannot partially transfer current tax-year ISA subscriptions into a Lifetime ISA".
Martin Lewis's Warning
Addressing the enquiry, Mr Lewis issued a warning. He said: "The question [on the podcast] was about the ISA rules, but individual providers can have terms and conditions which are more restrictive unfortunately."
Changes to ISA Allowances
ISA savers should note some key changes to ISA allowances coming in imminently. From the April 2027 tax year, the cash ISA allowance will effectively be reduced. Current regulations permit you to deposit up to £20,000 annually into ISAs, and you can allocate this allowance as you wish between cash accounts and stocks and shares ISAs. However, from the forthcoming tax year, you will only be able to utilise up to £12,000 at your discretion, while the remaining £8,000 must be allocated to stocks and shares ISAs.
People aged 65 and above will not be affected by these modifications and will maintain the existing allowance.
