Martin Lewis, the Money Saving Expert, has issued a call to action for anyone born between 1997 and 2008: pay just £1 today to open a Lifetime ISA (LISA). Speaking on ITV's This Morning, Lewis warned that the government's review of the ISA system could lead to rule changes as early as next year, potentially locking out those who haven't yet opened an account.
Why £1 Could Be a Game-Changer
Lewis explained that some providers, such as Moneybox and Plum, allow accounts to be opened with as little as £1. He 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." He added: "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."
Government Review Sparks Urgency
The warning follows the government's launch of a review into the UK's ISA system, prompting speculation that Lifetime ISAs could be reformed. Lewis said the current rules could change "sometime next year," meaning those who delay may miss the chance to open an account if eligibility criteria are altered. According to GOV.UK, you can only open a Lifetime ISA if you are aged between 18 and 39. Once opened, you can continue paying into it until age 50.
How the Lifetime ISA Works
Savers can pay in up to £4,000 each tax year and receive a 25% government bonus, worth up to £1,000 annually. The money can be used to buy a first home worth up to £450,000 or withdrawn after age 60. Withdrawals are also permitted for terminal illness. However, taking money out for any other reason triggers a 25% withdrawal charge, meaning savers could get back less than they paid in.
Minimal Risk, Maximum Potential
Lewis acknowledged the withdrawal penalty but noted that someone opening an account with just £1 would risk losing only about 6.25p if they later withdrew. He argued this was a small price to pay for securing access to the account. He also highlighted another key benefit: to qualify for the government bonus when buying a first home, the account must have been open for at least 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."
