The MoneySavingExpert.com founder dedicated the latest episode of his Martin Lewis Money Show Live on ITV to savings, including easy-access and ISA accounts
Martin Lewis has issued an urgent ISA warning to millions of savers ahead of the new tax year.
The MoneySavingExpert.com founder dedicated the latest episode of his Martin Lewis Money Show Live on ITV to savings, including easy-access and ISA accounts.
An ISA is a type of savings account where any interest you earn is tax-free. He explained that every tax year, you get a £20,000 tax-free allowance to use across multiple ISA products.
The tax year is due to end on April 5 – and if you don’t use your allowance, you cannot roll it over to the next tax year. There are different types of ISAs, including cash ISAs and stocks and shares ISAs.
Martin said: “The ISA year ends on 5 April – if you don’t use it, you lose it. Each tax year, over-18s get £20,000 tax-free ISA savings or investment allowance.
“But the most important thing to understand, an ISA isn’t a product – it’s just a tax wrapper.”
He added: “Your annual allowance doesn’t carry over – and if you don’t use it, you lose it. You get a new £20,000 ISA allowance on 6 April because that’s a new tax year.
“But if you’ve got money to put in now, even if you don’t feel you’re going to use it next year, and you haven’t got enough to fill the ISA allowance, you may as well get it in now, just in case something happens next year and you’re more flush than you thought you would be.
“But the really important thing to understand is once you put your savings or investment in an ISA, it stays tax-free year after year.”
You don’t always have to pay tax on your savings interest. If you’re a basic-rate taxpayer, you can earn £1,000 in savings interest before you start to pay tax – after this, you pay 20% tax on your savings interest above this threshold.
Higher-rate taxpayers pay 40% tax when they earn more than £500 in savings interest a year, and additional rate taxpayers have to pay 45% tax on all their savings interest, as they don’t get any tax-free allowance.
Martin Lewis also explained how cash ISA rules are changing from April 2027. From this date, the cash ISA limit for anyone under the age of 65 is being slashed from £20,000 to £12,000.
The overall ISA limit will still remain at £20,000 – so Martin explained that this means you could save £12,000 into a cash ISA, and then have £8,000 leftover to save in another type of ISA.
Over-65s will still be able to save up to £20,000 every tax year into a cash ISA.
