Martin Lewis is urging people aged 18 to 39 to put £1 into a Lifetime ISA (LISA) now, saying it could secure a significant savings boost in the future. The money expert's advice follows the Budget announcement that LISA accounts will be scrapped and replaced with a new First Time Buyer ISA.
Chancellor John Healey announced in the Budget that Lifetime ISA accounts will be replaced with a new First Time Buyer ISA, following a consultation launched last year by predecessor Rachel Reeves. The change will not take effect until 2029.
Who is eligible and what is the bonus?
For now, a LISA still allows anyone aged 18 to 39 (born between November 1987 and November 2008 as of today) to put money into a tax-free savings account to buy their first home, with the amount topped up with a 25% bonus. Those who do not use it to buy a house can instead switch it to a retirement savings account they can access aged 60.
In a post on X announcing the LISA changes, Martin told his followers: "If you're aged 18 to 39 and you don't have a Lifetime ISA, I strongly suggest you get a quid in one now. Even if you already own a home. And the reason for this has all got even stronger since the Budget. We now know in April 2029, the Lifetime ISA (LISA) will be replaced by the First Time Buyer ISA."
Why open one before 2029
He added: "But as long as you've opened one before then, you can still use and get the bonus on the Lifetime ISA after that. Now the Lifetime ISA bonus says you can put [in] up to £4,000 a year and you get 25% added on top. So that's up to £1,000 free each year. And that can be used towards a first-time buyer property under £450,000 or towards saving for your retirement. You can take the money out aged 60 with no penalty."
Martin also highlighted a rule that means the bonus cannot be claimed as a first-time buyer unless the LISA has been held for a year. "So one reason for putting a pound in as soon as possible is you get that clock ticking. Tick, tock. Tick Tock. Even if you're not ready to buy now, as long as it's more than a year away, once you are, then you can just dunk the £4,000 and you get the £1,000 bonus straight away," he said.
Withdrawal penalties to be axed
The LISA has faced criticism over withdrawal penalties, especially as the cap on house purchases has not kept up with house price inflation. Martin confirmed these penalties will be axed when the new First Time Buyer ISA is introduced.
