​Martin Lewis Warns There's Only Days Left To Claim Free £1,000 From Government

Martin Lewis has warned that there are just days left to claim up to £1,000 for free from the government, advising people to 'use or lose' their ISA allowances before the end of the tax year.

A Lifetime ISA allows you to save up to £4,000 a year towards your first home or retirement, with the state adding a cash bonus of up to £1,000 a year on top of that.

But with the current tax year ending on 5 April, you've not got long to cash in, as you'll need to transfer any money over before the new tax year to receive any bonus payment from the government.

In an 'urgent cash ISA tax-year end alert' in the latest MoneySavingExpert newsletter, Lewis said: "While cash ISAs aren't much cop for most, other ISAs can be. If you're a first-time buyer, check out the Lifetime ISA's 25% boost worth up to £1,000/year on your first home."

Alamy

Lifetime ISAs can be opened by any UK residents aged between 18 and 39, and give first-time buyers a 25 percent bonus up to £1,000 a year on everything they've managed to save.

You can put up to £4,000 a year into the account, but the team at MSE have previously encouraged people to open one and just pop £1 in there even if you're not sure you'll definitely use it.

"A Lifetime ISA (LISA) lets you save up to £4,000 every tax year towards a first home or your retirement, with the state adding a 25% bonus on top of what you save," the MSE website explains.

"That means you could get a chunky £1,000 of free cash annually. Plus you earn interest on whatever you save, and as it's an ISA, that interest is tax-free."

It adds: "You can save up to £4,000 a year in a LISA as a lump sum or by putting in cash when you can. The state will then add a 25% bonus on top. So if you save £1,000, you'll have £1,250 and if you save the full £4,000, you'll have £5,000. And that's before interest or growth.

Alamy

In his newsletter, Lewis advised against cash ISAs, which currently have worse rates than normal savings accounts, saying 85 percent of people are now better off ditching them.

Instead of putting your money into an ISA, Lewis recommended focusing on an account with the highest interest.

"Now the personal savings allowance means most DON'T pay tax on savings interest," he said.

"The PSA launched in 2016, allowing basic (20%) taxpayers to earn £1,000/year of any savings interest tax-free and higher (40%) taxpayers £500.

"At today's top easy-access 1% rate, you'd need a hundred grand saved to generate £1,000 interest. So these days, most people - over 19 in 20 in fact - don't pay tax on savings anymore.

"A cash ISA's just a savings account you don't pay tax on. And its interest doesn't count towards the PSA, so for the few who have big enough savings or earnings to break that limit, it's a boon, as they can protect more savings from tax (if so you've only till 5 April to use this year's £20,000 ISA allowance - it then stays tax-free year after year). Yet for MOST PEOPLE there's no benefit of saving in a cash ISA, so you simply should focus on getting the highest interest."

Topics: UK News, Martin Lewis, Money