Martin Lewis gives money-saving tips on Lifetime ISA accounts to claim £1,000 from government as deadline approaches

Martin Lewis issues an urgent reminder for people to “use or lose” their ISA allowances before the end of the current tax year. The money expert has warned that the deadline is approaching with days to claim for anyone using a Lifetime ISA (sometimes called LISA).

The Money Tycoon urged savers to claim their ISA allowances before the end of the current tax year, April 5. If you have a lifetime ISA, you can set aside £4,000 each year and the government will give you a 25% bonus on top of the money you save – that’s £1,000 a year.

An ISA cash account is a savings product where you pay no tax, up to a limit of £20,000 for the 2021/22 tax year, The mirror. reports. It can be used when buying a house or for retirement.

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“If you’re a first-time buyer, check out the 25% Lifetime ISA Bonus worth up to £1,000/year on your first home,” Martin said in the latest e- email MoneySavingExpert. Keep in mind that the amount you set aside in an LISA will count towards your overall annual £20,000 ISA allowance.

But if you’re saving for your first home, you won’t find a regular savings account with a bank or lender that pays 25% interest. You can open a LISA account if you are between 18 and 39 years old. It can be used to make a deposit towards your first home or for your retirement.

If you withdraw your money for anything other than these reasons, you will lose your bonus and pay a 25% penalty, which equates to a loss of around 6%. When it comes to cash ISA rates, Martin released a grim statement that 85% of people would be better off ditching them.

This is because cash ISAs generally have lower rates than normal savings accounts right now. Instead of hiding your money in an ISA, you should focus on an account with the highest interest, he said.

“Now the Personal Savings Allowance means most DO NOT pay tax on savings interest,” Martin explained. “The Message of public interest launched in 2016, allowing basic taxpayers (20%) to earn £1,000/year in tax-free savings interest and senior taxpayers (40%) £500.

“At today’s best and easily accessible rate of 1%, you would need a hundred thousand euros saved to generate £1,000 in interest. So nowadays most people – more than 19 out of 20 in fact – no longer pay tax on savings.

The easiest account to access at the moment is Virgin Money, which pays 1% interest on up to £25,000. If you have a smaller sum, it will pay 2.02% on £1,000. The second highest payer is Atom Bank which pays 0.9%.

If you can afford to tie up your money for an entire year, Shawbrook Bank is the best player paying 1.6% – but you need to invest at least £1,000. JN Bank will offer you 1.96% with their two-year fixed account if you pay a minimum of £1,000, or the best five-year fix comes from Monument with 2.4%. By comparison, the best easy-to-access cash ISA comes from Paragon and pays 0.8%, while OakNorth Bank’s one-year fixed cash ISA offers 1.28% interest and one of two. years of UBL UK pays 1.6%.