The Money Saving Expert made an appearance on ITV daytime show, This Morning
A quick and easy £1 deposit today could prove incredibly worthwhile in years to come, according to Martin Lewis. The Money Saving Expert believes anyone aged between 18 and 39 should consider acting now, amid growing uncertainty surrounding the future of Lifetime ISAs.
Appearing on ITV’s This Morning, Lewis encouraged all those eligible for a Lifetime ISA (LISA) to open one with a minimal deposit. He pointed out that certain providers, including Moneybox and Plum, allow customers to open an account with just £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 advice follows the government’s launch of a review into the UK’s ISA system, sparking speculation about potential reforms to Lifetime ISAs. Lewis warned that existing rules could change “sometime next year”, meaning those who delay may forfeit the opportunity to open an account should eligibility criteria be revised.
A Lifetime ISA can only be opened by those aged between 18 and 39. Once established, contributions can continue until the age of 50, provided the account was created while the holder was still eligible.
According to GOV.UK, savers can contribute up to £4,000 each tax year and receive a 25 per cent government bonus, worth up to £1,000 annually. The funds can be put towards purchasing a first home valued at up to £450,000 or withdrawn after reaching the age of 60.
Withdrawals are also permitted if the account holder is terminally ill. However, GOV.UK cautions that taking money out for any other reason typically incurs a 25 per cent withdrawal charge, meaning savers could end up receiving less than their original contributions.
Lewis addressed this during the interview, noting that someone opening an account with just £1 would only risk losing around 6.25p should they later choose to withdraw. He maintained that this was a modest price to pay for securing access to the account in case it proved beneficial down the line.
He also drew attention to another significant advantage of opening a Lifetime ISA sooner rather than later. To be eligible for the Government bonus when purchasing your first home, the account must have been open for a minimum of 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.”
