Pod Insights The Martin Lewis Podcast Free £1,000 a year for wannabe first time buyers | Will cash ISAs be cut | LISA v Pension About this episode Martin looks at Lifetime ISAs, after a report was published by the Treasury Committee on the future of the first time buyers savings account, he explains the basics of them and answers questions on who they are good for, who they don’t work for and when is the best time to open one.
Energy bills dropped 7% this week, Martin explains what people should be doing, and most importantly what happens next.
Martin reacts to reports the Chancellor is to drop cash ISA allowance in her Mansion House Speech on 15 July.
Mastermind tests if Adrian knows when you are covered by Section 75 Consumer protection.
And there’s a new top savings account that’s a bit different isn’t there?
Transcript 11,912 words · 8 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:10 Martin Lewis? Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Now, usually, much of it comes from a BBC Radio 5 live show with Adrian Charles. But don't worry, there's bonus money-saving tips just for you lucky, lucky podcast listeners. Play the theme tune.
1:46 Speaker 05 Martin, how the devil are you? What have you got for us today?
1:49 Martin Lewis? Well, you have a whole load of subjects coming up today. The biggest one is the lifetime ISA, also known as the LISA, which is designed for first-time buyers to give them a 25% boost on their savings. There was a report out by the Treasury Committee on Monday which questions whether it's value for money. But I want to talk to you about when it's good, when it's not good, who should use it, and why every- Everyone aged 18 to 39 who has never bought a house should put at least £1 in a lifetime ISA as soon as possible if they haven't already. We've also got lots of money news to cover. Energy bills, or the energy price cap at least dropped 7% this week. So what should you be doing? Most importantly, what happens next? We've got reports the Chancellor is to drop the cash ISA allowance at a speech on the 15th of July at the Mansion House.
2:34 Martin Lewis? What do we know? And I'll talk you through my views on that. And there's a new top savings account that's a bit different, likely not to be around for very long, so I want to squeeze that in there. And finally, in Mastermind, Adrian, it's on section 75. Do you know what section 75 is?
2:51 Speaker 05 Is that the credit card one?
2:52 Martin Lewis? It is. It is. So that's a good start. So surely you're going to get it right today?
2:58 Speaker 05 I wouldn't have thought so, but thanks for your confidence.
3:09 Martin Lewis? Okay, so now we're going to do a quick roundup of the news in brief. News in brief one, the energy price cap was cut 7% this week. What does that mean for you? Should you be doing a meter reading? And where are energy prices going to go in future? Well, why don't we start with energy bills? So we had, because it's the 1st of July and it changes every three months, we had the energy price cap drop by 7% the other day. Now, the energy price cap dictates the price anyone on the bog standard default tariff at an energy firm pays. So if you're not on a fix, you're not on a special deal, or you're fixed ends and you've done now, you are on the energy price cap. It affects two thirds of homes are on the energy price cap. It's only England, Scotland and Wales.
3:53 Martin Lewis? It doesn't apply in Northern Ireland, which has a separate system. So it's come down by 7%. There's lots of this talk about typical use. That's a nonsense for most people. The easiest way to say it is, for every £100 you were spending for the same energy use, you would now pay 93 quid, although actually it's slightly skewed because the discount on gas is big, or the reduction in gas is bigger. So if you've got more gas bill, it'll probably be a little bit more and a little bit less. Now, the really interesting thing, though, is not about the July price. Price cap, which everyone's talking about, by the way, quick aside, if you haven't done a meter reading and you're on direct debit and you don't have a working smart meter, it's worth getting a meter reading in soon because with the price dropping, you don't want them to assume that any of your usage after the price has dropped is still at the
4:36 Martin Lewis? rate before the price has dropped in their estimate. So you're putting a mark in the sand now to say everything before this point was at the higher rate, everything after this point is at the cheaper rate. But the big point, I'm digressing, let me carry on. I'm sorry, why I'm even saying that? No one was trying to stop me apart from me. I'm having a whole conversation by myself. Right. The big point I wanted to make is there's actually been a huge shift in the last week to what we expect to happen in the next price caps. So the price cap moves every three months. The next price cap will be the first of October. A week ago, the prediction was it would rise by 3.7%. That's an average prediction based across the predictions from British Gas, Eon Next and EDF, and I average them all together.
5:21 Martin Lewis? Now, the prediction is it will be flat in October. Now, the reason for this big change is we saw substantial spikes in wholesale energy prices, wholesale gas rates specifically, which is the main reason the price cap changes. It's not the underlying everything in the price cap, but the reason it changes each time is based on wholesale rates over a three month average period. The period we're in for October, we're about halfway through now. It's from mid-May to sort of mid-August. So we're roughly halfway through the assessment period. So we saw a big spike due to the Israel-Iran conflict in the Middle East and wholesale price rates went up. Once that calmed down, they've actually come down quite substantially.
6:06 Martin Lewis? So now the prediction for October is no change. Now, I need to, people get confused about this. It's a three-month averaging process, if you're with me. So the fact that it spiked is not irrelevant. Even though the spike has come down, because it's an average price over three months, the fact we had two weeks of high prices is now baked into whatever will happen in October. But prices have come down rapidly. We're now looking at no change in October, down a tiny smidgen in January, 0.4%, then up 5.1% in the April to June price cap, though the further out you go, the more crystal ball gazing it is. So that is slightly better news, though I still have to note because those wholesale rates have come down, the rate at which you can fix has come down too.
6:51 Martin Lewis? So you can currently get a fix at 10% less than the current price cap. We would need to see monumental falls in wholesale rates before October's price cap was cheaper than the 10% cheapest fix. It's very unlikely to happen, nothing's impossible. And I think the strong likelihood is still, if you were to fix now with the cheapest fix available now, you would save money over the next year based on the current predictions compared to staying on the price cap. So the price cap is still a pants cap. But it is interesting that the forecasts are not as bad as they were, is how I will phrase it. News in brief number two. There are reports the Chancellor will announce she's slashing the cash ISA allowance
7:35 Martin Lewis? when she makes her Mansion House speech on the 15th of July.
7:41 Speaker 05 What about these reports that the Chancellor is thinking about dropping the cash ISA allowance in the Mansion House speech on the 15th of July?
7:51 Martin Lewis? Okay, so this has long been flagged. In fact, we're going to be talking about the Treasury Committee on Lifetime ISAs a little bit later that I gave evidence to, and I was asked that question when I gave evidence in February, because it was already being flagged that this would happen. So the concept that we're hearing, and of course, nothing is confirmed, and there are, you know, lots of debates going on about what's going on in the Treasury at the moment. So we genuinely don't know. But the prediction is that the current ISA limit of £20,000, so that's the total amount you can put into ISAs each year, whether it's cash ISAs or stocks and shares ISAs, or a mix of the two, will remain the same. But the amount that you can put into cash ISAs will be cut.
8:32 Martin Lewis? Some are suggesting it will be cut to as low as £4,000, which would be a radical cut. Now, I am not in favour. And I'm not in favour of it for a simple reason. The concept behind it, we're being told, is that it would encourage people to invest and to use investment ISAs rather than cash ISAs. And I simply don't agree that that will happen. It's meant to be a form of nudge economics. I think it's less nudge economics, more pee people off economics. Because I think all it will do is get people to be very frustrated. Because putting money in cash savings is just so different to investing. It's, you know, it's as different as apples and ducks. They are not the same thing. And people aren't going to say, oh, now I'll have to pay tax on my savings, so I'm going
9:16 Martin Lewis? to go and take a risk and invest it. They're a different asset class. And in fact, there are some big investment firms who are backing that up too, though it's other big investment firms who are calling this to happen. So I don't think it will achieve the goal. What we need to do absolutely is encourage people to invest, and we need more education on investing. We need more guidance, especially free guidance for people on how to invest. We need to educate people about how risk works and that risk isn't always negative. But I think this is an issue. And I know some will say, look, £20,000 per tax year is a huge amount that only affects the wealthy. And I accept that. But if this was an issue of redistribution and cutting costs and putting money into the exchequer, then you would cut the entire ISA allowance.
10:01 Martin Lewis? Because ultimately, the people who put 20 grand in investment ISAs each year are wealthier than those who put money into cash ISAs each year. If this is just an attempt to skew the economics to push people into investing, I think all it will do is annoy many people, and it won't actually achieve the aim. Now, I did social media polls on this yesterday, and actually, it was gobsmacking what the vote was. I'm going to give you the one from X, although actually, it was even stronger on other polls. But this is the one I've got in front of me. I asked, should the cash ISA allowance be cut? The Chancellor is rumoured to be cutting the tax-free savings allowance from the current £20,000 per tax year. What's closest to your view to do a fair limit balancing the benefit to savers versus the cost to the state?
10:45 Martin Lewis? Seventy-five percent in people, three in four, said it should be £20,000 or more. Eighteen percent said it should be £10,000. Three percent said it should be £5,000 and four percent said you should scrap cash ISAs. And over all the platforms, it was an average of around 80% who said we should keep the cash ISA limit where it is now or increase it. Now, I accept that is a self-selecting poll. It's not a statistical random sample. But I think it certainly shows the barriers and the potential political unpopularity the party will face, the Labour Party, if it cuts the cash ISA limit on the 15th of July. And obviously with everything going on at the moment and the number of new terms that have happened, it will be interesting to see if they decide to do that. Personally, I think it's a mistake.
11:28 Martin Lewis? I could see much stronger argument in cutting all of the ISA limits rather than just cutting the cash ISA limit.
11:33 Speaker 05 Andy and Roger have got similar questions, really. And as Roger puts it, if the Chancellor reduces the cash part in favour of investments of ISAs, how does this affect older savers who are advised to reduce their investments in stock and shares as they age, you know, put them in a, you know, a more conservative, safer place, i.e. cash when the time comes?
11:54 Martin Lewis? Well, I mean, it depends how much income and savings that you have. Ultimately, all it means is you will start to pay tax on some of your savings interest that you wouldn't have done otherwise. Now, it's worth noting, from what I gather, it is only being discussed dropping the cash ISA limit in future, so any money already in cash ISAs or in cash ISAs before the change comes will continue to be protected from tax on interest. It's just how much you could put it in future. Worth remembering, of course, all basic rate taxpayers can earn £1,000 of interest a year in any form of savings without paying tax on it. Higher rate taxpayers, £500. And those who have very low incomes, which will include many pensioners, of course, you can earn £12,500 a year of any form of earnings, income or interest in savings without paying tax.
12:37 Martin Lewis? Then there's a thing called the starting rate of savings that potentially gives you another £5,000 of interest you can earn if you have very low earned income. And then you've got your personal savings allowance. So the truth is, it would affect pensioners, but it would only affect pensioners who have income. And many pensioners are basic rate taxpayers because they have income coming in from their pensions and substantial amounts of savings. But yes, it would mean you would pay more tax on your savings. News in brief number three. There's a new top savings account that's a little bit different. So I thought I should tell you about it. I just wanted to mention this because it's quite interesting and we don't often see it. There is a savings account at the moment that's arguably the best of both worlds. It's the top one year savings fix.
13:20 Martin Lewis? So you can lock your money away and earn 4.55% guaranteed for one year, which is normally why you go to a fix. The cost of a fix is normally that you can't withdraw your money. So you have to be committed to locking it away totally. The interesting thing about this Marcus 4.55% one year fix. Marcus is an app based bank, so you have to open it through an app. It's part of Goldman Sachs, so it's, you know, part of a very big bank. You can put up to 250 grand in there. You only need a minimum of a pound. Is it unusually gives you the flexibility that if necessary, you can withdraw money during the fixed term. Now, to do that, you actually have to close the account and you would lose 90 days of interest, although if you closed it in the first 90 days, you'd just lose any interest you'd been paid up to that point.
14:05 Martin Lewis? So it certainly isn't an account for those people who were willy nilly going to take money out. But anyone who wants to put money away in a fix and just has slight worry about doing so just in case they had an emergency and they needed to access that money, then it becomes a very good option because you're going to get 4.55% and in that emergency, you could actually get the money out. I don't think it's going to be around very long though. They've said it could go at any time. And, you know, if you're listening to this in the podcast afterwards, double check it's still available, but at the time of broadcast, it is available and I thought it was interesting.
14:42 Speaker 05 Let's go to the main topic of the day, lifetime ISAs. We had a report published by the Treasury Select Committee earlier this week on the future of this kind of savings account for first time buyers. So loads of questions, including one from Claire in Taunton, who joins us with her son, Toby. So Claire, Toby, morning to you. What's your, what's your question?
15:05 Speaker 06 Toby's about to graduate from university next year and we're wondering what is the best vehicle to use for saving or for a house and just general savings for young people nowadays?
15:18 Martin Lewis? Well, the Lifetime ISA is an incredibly powerful product for wannabe first-time buyers, saving towards a deposit for a home. Many people tell me it works brilliantly. Let's start with the positives. I got an email from Ollie a while back that I really like. It says, "Hi, Martin. My girlfriend and I have just completed on our first house in West Sussex. I've maxed out the LISA for the past six tax years and my girlfriend for five. Because of this, we received an extra £11,000 towards our deposit. Without this, we would not be able to afford it. But the LISA is broken in parts. So the basics of a LISA is if you are aged 18 to 39,
15:57 Martin Lewis? you open a LISA, you're saving it up to £4,000 a year, and the state adds 25% on top that can be used either for a qualifying first house, which is basically any residential mortgage on a property that costs under £450,000, or you can wait to take it out once you're aged 60 and you will get the bonus. So you can use it for the secondary purposes for retirement savings. Now, on that basis, it's fantastic because you put four grand in each tax year. If you can max it out, you get £1,000 for free from the state. The big question and the big problem with using it as a first-time buyer is what happens if it's not a qualifying house or you want to take the money out for another reason. So is Toby with you?
16:41 Speaker 06 Yes.
16:42 Martin Lewis? Does Toby and you have any view of where in the country Toby would be looking to buy a house and when?
16:48 Speaker 05 Toby, do you want some privacy here so your mum doesn't actually hear what your actual plans are? Or you just fire away, Toby, go on.
16:55 Speaker 06 No, that's all right. I guess right now it feels like quite a task to achieve just getting one, so I'm not very picky, to be honest.
17:05 Martin Lewis? So, let me tell you the problem and the big issue I have, and it's something I've been campaigning about. There is a withdrawal penalty that has been put in... What are you studying, by the way?
17:15 Speaker 06 Wildlife conservation.
17:16 Martin Lewis? Ah, if it were maths, I was going to ask you a really tricky question, but I'm going to let you off. There is a withdrawal penalty on the lifetime ISA that says if you take money out for any other reason than buying a qualifying house, or until you're aged 60, you pay a 25% penalty. So, if you think about it, you get a 25% bonus, but you pay a 25% penalty. Now intuitively, many people think that means you get back what you're putting in. It doesn't, because let's imagine you have a thousand pounds in there, you get a 25% bonus, you've got 1,250 pounds, you have 25% now taken off, 1,250, that's more than 250 quid, because it's 25% of a bigger figure. And the actual net result of this is if you take money out of a lifetime ISA for the wrong
18:00 Martin Lewis? reason, you pay an effective penalty of 6.25%. In other words, you save 10,000 pounds in there, hoping to buy a house, you're hoping you will get 12,500 pounds, because you want the bonus, but you then take it out not to buy a qualifying home, and you only get back 9,375 pounds plus interest. So you actually get back less than you put in if you take it out for the wrong reason. Now, I don't have a problem with that, because the lifetime ISA was set up for specific reasons, either saving for your older age, or saving for it to be a first-time buyer. The issue for me is for those people who are priced out, who have gone into an area where they started saving for a LISA, and now they realise, it certainly happens in the south-east of England, or London especially,
18:44 Martin Lewis? that as a first-time buyer, the only property they're going to be able to buy is above 450,000 pounds. So they are using the lifetime ISA and have used the lifetime ISA for what the state intended them to use it for, to buy a first-time property, but because that first-time property is over the threshold, they now have to pay a penalty and to use it towards their deposit, they're actually going to lose some of their deposit money. Not not only not get a bonus, they're going to have to pay a fine to the state to get their money out. I have been campaigning that if you're buying a first time property above the threshold, but it's a first time property. While you don't get the bonus, you should at least not pay the fine. So Toby and Claire. That is the big issue for you about a lifetime ISA. You're buying a property above that £450,000.
19:27 Martin Lewis? I don't know where in the country you are, but that is the concern.
19:31 Speaker 06 South west.
19:32 Martin Lewis? South west. So you're probably first time buyer properties are under that amount, aren't they typically?
19:37 Speaker 06 Yeah, yeah.
19:38 Speaker 05 Toby can't possibly know five, 10 years down the line where his life will take him.
19:44 Speaker 06 Yeah, exactly.
19:46 Martin Lewis? And that is the risk that you take. And it's funny, when I was giving evidence on this, one of the points I made. And I think this is, this is really important, because people are of course thinking about it as. As a, as a rich people problem, you know, you're in London, you're buying a house over £450,000. For some people, if you're in the north east of England or you're in areas of Scotland, you're thinking that's just a ridiculous amount of money. But it's, it's the amount that you need to buy. But the floor in lisas doesn't just hurt those with lisas, it puts off many young people. The fact that I have to have this explanation when I'm talking about lisas. It puts off many young people, especially from lower income backgrounds who tend to be more risk averse. From opening lisas in the first place. So therefore they don't necessarily get the help when it would be appropriate for them afterwards.
20:28 Martin Lewis? So look, I'm going to give you the most important piece of advice I can give anyone who has never owned a house. Who is aged between 18 and 39 and who one day wants to open a house. And this is the bit I can guarantee you should be doing. Put at least one pound in a lifetime ISA. In fact, put only one pound in a lifetime ISA if you're not sure you will be buying a house. Now, this may sound perverse, but the reason for this is quite important. There is another quirky law within the lifetime ISA structure. That says you must have the lifetime ISA open for a year. Before you can use the bonus as a first time buyer.
21:08 Martin Lewis? So if you open one today, put £4,000 in, got a £1,000 bonus, but then tried to buy a house, you'd actually have to pay the penalty. To get your money out if you did it within the first year. So the reason for me giving this urgent one pound warning flag is everybody frankly, parents on your kid's 18th birthday, give them a quid to open a lifetime ISA. Because what that does is that gets the clock ticking. Now, you might leave it sitting there for five years doing nothing, but in five years' time, suddenly you might have come into some money, you decide you want to buy a house. At that point, boom, you can put £4,000 in that tax year in a lifetime ISA and boom, you get a £1,000 bonus on top from the state, assuming it's still in existence. And boom, you can then use that straight away as a first time buyer.
21:53 Martin Lewis? So putting the pound in gets the clock ticking. I accept I am putting some of your money at risk. If you put the pound in, you don't want to buy a qualifying house and you want to take the money out before you're aged 60, it will cost you six pence, but I think that risk is worth it. So my minimum Claire and Toby is I want a pound in a lifetime ISA, yeah? Whether you put more in or not depends on your thought on the £450,000 property limit. Sounds like balance of probabilities, this would be all right for you to do and you would benefit from it, unless Toby, you have thoughts and maybe you get your pound in now, maybe you hold off for five, six months, you see how your career is going, where you're going to get a job when you graduate. And then if you're not going to be looking to live in the southeast of England, maybe
22:36 Martin Lewis? then you start shoving whatever spare cash you have into a lifetime ISA.
22:39 Speaker 05 Thank you both very much Claire and Toby for coming on. Tracy asks, what if you've been fortunate enough to inherit a house? Does that mean you can't access the lifetime ISA till you retire or the money in it? So I assume there's money in a lifetime ISA, then what, you know, a house comes your way and the money's stuck there, is it or not?
22:59 Martin Lewis? You could have never owned or part owned a home anywhere and so if, yeah, that's a very interesting question. The only reasons you can take money out of a lifetime ISA without penalty are buying a first qualifying first time property. Once you're aged 60 or sadly, if you have a terminal illness or if you, if you were to die and then it would be left to people, that wouldn't be the penalty to pay and the bonus would come on. I don't believe there is an exemption for if you suddenly inherit a house once you have started saving. I would have to double check. I'm 99% sure there isn't because ultimately you still have the ability to use this towards retirement and wait until age 60. That's the original, I mean, it doesn't make sense, I agree. So yeah.
23:45 Martin Lewis? Those asking, have I inherited a house and I've now sold it and I only owned it for a year and I only owned, part owned it. You have to have never owned or part owned a home anywhere in the world to be able to get a lifetime ISA towards you. And to get a lifetime ISA, it has to be towards your first residential, so you can't do it with buy to let, mortgage, and you have to be getting a mortgage. You can't do this as a cash buyer. So I'm afraid those are the criteria.
24:13 Speaker 05 Okay, is there any chance the fee to withdraw from the lifetime ISA will ever be removed?
24:21 Martin Lewis? I don't think the fee in general will ever be removed. It was temporarily removed during the pandemic. So just to go technical, because we need to do this properly, my proposal when I say people who buy a property above £450,000 shouldn't pay a withdrawal fee is technically to reduce the withdrawal fee from 25% to 20%. And what that would effectively do is it would mean you don't get the bonus, but you get back whatever you put in. So that's the mess of it. So just to say, when we're talking about having no withdrawal penalty, we're talking about reducing the withdrawal penalty to 20% rather than 25%, because that means you don't get the bonus, but you still get your money back. Do I think there's a chance it'll be removed in totality? No. Do I think there's a chance it'll be removed for people buying a property over £450,000
25:06 Martin Lewis? or that £450,000 would be uprated with inflation? Yes. In the Treasury Committee report that came out on Monday, I mean, this is the main bit I gave evidence on. I mean, it is in there that this is one of the holes in the system. They pointed out some other holes in the system as well. I need to be honest, I thought I was going to get there with Jeremy Hunt when he was Chancellor, he'd talked to me about it, I thought it was coming, and then he didn't put it in his last budget and sort of indicated he was going to put it in his next one. It was sort of the subtle messaging I got, which was very disappointing, because at the time I didn't think he was going to have a next one, looking at the electoral cycle. I wrote to Rachel Reeves about it. Rachel Reeves, I don't think sees this as a particular priority. I see this as a justice issue rather than an affluence issue, and it's also about encouraging confidence in the system. But maybe this Treasury report will do it.
25:51 Martin Lewis? But I'll be honest, I'd put it at 10 to 15% chances, not much more.
25:57 Speaker 05 Okay, Gary has got this question. Miss A has an individual Lysa and her boyfriend, Mr. B, has his own Lysa. Can they be combined to buy a future marital home?
26:09 Martin Lewis? Well, first of all, isn't it nice that they met each other with those surnames?
26:12 Speaker 05 Yes.
26:13 Martin Lewis? I mean, it's lovely. Could you imagine?
26:15 Speaker 05 Well, these are friends of Gary's, one assumes.
26:16 Martin Lewis? Okay, yeah. So, Miss A and Mr. B, a Lysa is an individual product. So, a first-time buyer buying with someone who's owned before can still use their Lysa? Two first-time buyers can have one each, meaning combined, they could get up to a £2,000 annual bonus. Sometimes people say to me, if there's two of you, does that mean you can buy a qualifying home that's worth up to £900,000? No, the property price still has to be under £450,000. But the answer to your question is, could Miss A and Mr. B get together and buy a property and both have a Lysa and both get the bonus if they're both first-time buyers? Yes, indeedy, is my answer. Maybe have a little chance, see.
27:02 Speaker 05 Lee wants to know, does contributing into a Lysa impact your general Lysa allowance for the tax year? E.g., could I contribute 20K into the SNS Ilsa and 4K into a Lysa?
27:17 Martin Lewis? No.
27:18 Speaker 05 Not that I ever get a chance to. By the way, Lee couldn't come on live as she is currently doing her driving test.
27:24 Martin Lewis? Did you pass on your first? Are you a first-time passer, Adrian?
27:27 Speaker 05 I was a second-time passer and I would advocate that because you can't enjoy it. The joy is so much greater when you know the misery of failure. Without failure, there is no joy, Martin.
27:39 Martin Lewis? Well, that's the whole premise of the mastermind questions I give you, Adrian. I am also a second-time passer. I still remember the nightmare of my first test. I was driving a car that wasn't mine. It was the car you meant to drive the test in. I was very hot and sweaty because I was a panicking, nearly 18-year-old at the time. And because I was so hot, the window started steaming up, especially the back window.
28:07 Martin Lewis? Know the car and I was too scared to ask the driving instructor where the D Mister was. So then I had to do the reverse round the corner, which you did back then. I don't know if they still do it. And I reversed around the corner, but I couldn't see through my back windscreen. So I got it wrong and I failed. And a lesson learned. And he said to me at the end, why didn't you ask me where the D Mister was? And I said, I didn't know I was allowed to talk to you because I was a very scared young man. So Lee, I'm going to answer your question. And I hope very much you get satisfaction and pass your test, whether it's your first, your second or your third. What was the question again?
28:39 Speaker 05 Where's the D Mister button? No, the question is, does contributing to a LISA impact your general ISA allowance?
28:45 Martin Lewis? Yes, it does. Absolutely. You are allowed to put up to £20,000 in ISAs in combination in a tax year. A lifetime ISA is a form of ISA. It's an individual savings account. It's a tax-free way to save. Where the interest can never be taxed. So yes, if you put £4,000 in a lifetime ISA. You would only be able to put up to £16,000 in other forms of ISAs in the same tax year. Hello, podcast producer Simon here. Since we recorded the pod, Lee has got back in touch with us to say she actually passed first time. We're delighted for you, Lee.
29:16 Speaker 05 Back to your LISA questions.
29:19 Speaker 05 Will wants to know if you have to have money in a lifetime ISA for a minimum time period before you use it for a house deposit? Or could, could he put £4,000 in and get a thousand pounds of government contribution and then use it straight away?
29:31 Martin Lewis? No, because it has to be open a year. But if you put a pound in now, so that you have the facility, that counts as being open, even though you don't put any more money in. And then once, then you can put money in after a year, you could dunk your £4,000 in the next tax year. Or in two tax years' time, even if you'd not saved another penny apart from the pound, hence my one pound tip earlier.
29:49 Speaker 05 How do lifetime ISAs compare with Help to Buy ISAs?
29:52 Martin Lewis? Okay, that's the big one. Right, the Help to Buy ISA is the predecessor to the lifetime ISA. The big difference between the lifetime ISA and the Help to Buy ISA is lifetime ISA also has the retirement element, Help to Buy ISA doesn't. Let me just run through a bit of a punch up between the lifetime ISA and the Help to Buy ISA. The reason this is important is while you can't get a Help to Buy ISA anymore, many people with Help to Buy ISAs. The idea is, should you be doing it in a lifetime ISA rather than? The Help to Buy ISA, you can have both, but you can only use one for a home purchase. So first of all, the biggest advantage of the lifetime ISA is you can put up to four grand a year in it and therefore get a 25% bonus on that. Effectively, in a Help to Buy ISA, it's a monthly maximum. You can only put up to £2,400 a year in it, so you can save less in it.
30:35 Martin Lewis? To get money from a Help to Buy ISA to a lifetime ISA, you can transfer it from your Help to Buy ISA, but it uses up your £4,000 a year you can put in a lifetime ISA. So say you had five grand in a Help to Buy ISA. You could move four grand to this year's lifetime ISA, but you couldn't add any contributions to it because you'd have used it up and you could move the extra grand next year and then you could add three grand on top. The maximum bonus in a lifetime ISA is technically 33 grand because you do maximum contributions every year from 18 to 49 and the bonus is paid every year up to age 50, where it's only £3,000 in a Help to Buy ISA. You can invest in a lifetime ISA, whereas, so you can do it to stocks and shares lifetime ISAs. You can only do cash savings Help to Buy ISAs.
31:16 Martin Lewis? This is one of the big ones. The maximum property price on a lifetime ISA is 450 grand. On a Help to Buy ISA, it's only 250 grand, although 450 grand in London. What can it be used for? The Help to Buy ISA is paid at completion, so it's only helpful for your mortgage deposit. The lifetime ISA is paid at exchange, so it can be used towards the deposit for a house. So it is much better in that way. The biggest advantage of the Help to Buy ISA though, over the lifetime ISA, is there's no withdrawal penalty. So you have money in a Help to Buy ISA. If you don't buy a house, you can just take it out and you get your interest. You just don't get the bonus. That is my quick fight between Help to Buy ISAs and lifetime ISAs.
31:59 Martin Lewis? If that all sounds a little bit complicated, here's a quick summary. The advantage of the Help to Buy ISA is flexibility. You can save in it, keep your money in there, and if you decide not to buy a property, no problem. You can take it out and you get the interest. You just miss out on the bonus. Whereas the lifetime ISA is far better if you're definitely buying a house because you can get a bigger bonus each year and you can buy a bigger house with it, up to 450,000 pounds. The problem with the lifetime ISA is if you want to withdraw the money for anything other than buying a qualifying house or till you're age 60, then you're going to pay a penalty, so it's far less flexible. Help to Buy ISA flexible, lifetime ISA bigger bonus if it works. I think at this point, I have loads more on lifetime ISAs. I know people have questions
32:41 Martin Lewis? about whether you should use it for retirement and they want to know all the best buys. I'm gonna do those later, but at this point, I think we should play that theme tune.
32:56 Martin Lewis? There we are, Adrian. Are you all ready? It is time for Money Mastermind. Current score, Adrian has 10 right in this three option multiple choice and 18 wrong, so he's still riding slightly better than random chance. Now, Adrian, as you may know, lost his Glastonbury virginity last week. Adrian, how was it before I go on anymore?
33:16 Speaker 05 It was a learning curve. It was great. You know, something weird happened. You know, when on the show, a bloke last week, a bloke texted in and says, "I'm going for the first time." Yeah, Rob, 49. "I'm going for the first time now. I'm more nervous, you know, than excited." And you said, "Oh, you should meet up for a drink." And how we laughed, right? Friday evening, I was in a bar, just the 220-odd thousand people all around me in that big field. And who should tap me on the shoulder? That's always the normal thing in the world. "Oh, hi. Hi, Adrian. It's Rob here. I was on the radio with you yesterday."
33:51 Martin Lewis? Ah, and how did you... So you and Rob were both, you know, losing your Glastonbury virginity at an aged state. How were you both enjoying it?
33:59 Speaker 05 We were enjoying it. Still a bit nervous, playtied, bushy-tailed at that stage, but that was just a Friday night. By Saturday, we were like old pros who could go to the bar and buy a pint without being too scared or anything like that. We were getting there, for sure.
34:16 Martin Lewis? Well, so as you'll realise, everybody, Adrian was incredibly excited by his Glastonbury trip. At one point, and without any hint of exaggeration, at one point, there was actually a trace of enthusiasm in his voice. I mean, that's how much. And if you know Adrian, you realise that's going somewhere. He was so into it, in fact. He decided to buy his wife, who wasn't there, a £325
34:39 Martin Lewis? Limited edition Rick Astley themed Bluetooth speaker made out of recycled tent canvases, shaped like a Wellington boot, programmed to play Never Gonna Give You Up.
34:52 Speaker 05 Mm-hmm.
34:53 Martin Lewis? Every time it rains engraved with Even ankle deep in mud and halfway through a port-a-loo queue, I thought of you. Romance isn't dead.
35:02 Speaker 05 I'm just, I'm just writing that down feverishly because that sounds like a great present. Marvelous.
35:07 Martin Lewis? Yes. Truth be told though, he paid for this on his wife's credit card and he's only a second cardholder. Sadly, once home, he discovered the speaker was faulty and played the song constantly. Do we have any of that song?
35:17 Speaker 07 Never gonna give you up, never gonna let you down, never gonna run around and desert you.
35:25 Martin Lewis? When he got in touch with the firm, it had gone bust, having unsurprisingly only sold one model of the, the speaker. The question, Adrian, are you covered by the credit card under section 75 consumer protection? So the point is, you bought it, it was over the £100 minimum for section 75, so that isn't an issue. But you paid on your wife's credit card, your three options, yes.
35:49 Speaker 05 And I, my name is on that.
35:51 Martin Lewis? Yes, you are a second, you were using the Adrian Childs card, but it is your wife's credit card. You are a second cardholder. So the answer is yes, all purchases are covered by section 75. No, as you're a second cardholder. Or yes, as even though you're a second cardholder, the purchase benefited your wife. Those are your three options. Does section 75 apply to second cardholders? So yes, all, always, in the same way as it would if you were first cardholder. No, not at all, doesn't work for second cardholders. Or three, yes, because while a second cardholder, the purchase benefited your wife.
36:32 Speaker 05 Okay, well, look, if it's not A, then Section 75 is an ass. Because I can't think of a single logical reason why it shouldn't be A. It's purchased on the credit card, that's all that should matter. Whether I'm the second person, or the second holder, or whose benefit it is, then Section 75 should certainly apply. And I'm always trying to answer these questions, assuming the world is how I want it to be, rather than how it probably is, so I'm going for A.
37:00 Martin Lewis? So your answer under the Adrian Tinted World Spectacles is yes, all purchases should be covered. Why would you have less rights if you weren't a main card holder? Now, before we get into the answer, just a quick upsum on what Section 75 rules actually are. And what they are is a powerful form of consumer voodoo. Section 75 of the Consumer Credit Act says, "If you buy something and pay for any of it on a credit card, and the item costs between £100 and £30,000, then the credit card company is jointly liable with the retailer for the transaction." Now, that doesn't just mean if the company goes bust, you can go to the credit card company.
37:41 Martin Lewis? It means you have identical rights with the credit card firm as you do with the retailer. So if an item is faulty, imagine you bought it abroad and you couldn't go back to the shop. You can go to the credit card company and expect the same rights as it to deal with the faulty item as you would have if you had taken it to a retailer. It's hugely powerful, it's part of the law, it staggeringly actually applies. Even if you spend any amount on the credit card, you're covered for the whole bit. So, I always tell, I won't go into detail now. Somebody bought a £16,000 kitchen, they paid a £100 deposit on the credit card. The kitchen company went bust, they were entitled, they went to the ombudsman to enforce it, they were entitled to all of the £16,000 back from the credit card company, not just the £100 put on a credit card.
38:25 Martin Lewis? So you could even look at it and say, even if you don't want to buy something on a credit card, if it costs over £100 and it's an important transaction, spend a penny. Don't go to the loose, spend a penny on the credit card, and then the credit card protection covers it. There are some exemptions to the rules, it doesn't always work, but it's one of the most powerful forms of consumer protection you get. Anyway, back to the answer of the question.
38:49 Martin Lewis? Well, the answer's quite simple. Section 75 is about a direct causal link between the purchase and the debt. And the argument is being a second cardholder breaks that causal link. So the answer is definitely not, yes, all purchases are covered. Can I have an uh?
39:07 Martin Lewis? I'm afraid you have the answer wrong. But is it no, you don't get it at all, or no, as even though you're a second cardholder, the purchase benefits your wife? So, the most important thing for everybody to remember, I would first of all say is if you're making an important purchase on a credit card and you want the section 75 protection, you are far safer for the first cardholder to be making that purchase. However,
39:34 Martin Lewis? and that's because they're the one who signed the credit agreement.
39:37 Speaker 05 God, that's mad.
39:38 Martin Lewis? If, if though, the second cardholder is making a purchase which would benefit the main cardholder. So for example, you were buying a family holiday that you were both going on, then that would likely be covered under section 75.
39:54 Speaker 05 But who can judge that? I mean, I could, you know, I could have been buying myself some West Brom boxer shorts. You could, you could argue it to my wife for anything because she'll get to see me in them.
40:03 Martin Lewis? That's a good question. I'm going to finish this and then I will answer that question. Who can judge it? Because it's actually very important. If you are buying something directly for the main cardholder, then the same applies. So in this case, the likely answer is, yes, the purchase is covered under section 75 because you were buying a gift specifically for your wife. Now you ask me the question, who judges it? So let me talk through what would practically likely to happen if you made a section 75 claim. If you made a section 75 claim, almost certainly the card company would reject you out of hand because they would say you were the second cardholder. If you then spoke to me, which you have the ability to do, I would say, whoa, hold your horses there, Adrian. I don't know why I'd put that voice on, but it's what I would say. And I would say,
40:47 Martin Lewis? I think that's wrong because you were buying a present for your wife and it's therefore in her primary benefit. Therefore, I would make a formal complaint to the firm. They have eight weeks to respond and I would take them to the Free Financial Ombudsman Service, which would likely adjudicate in your favour, as long as you had decent proof that this was for her. And the fact that it was engraved with "Even ankle-deep in mud and halfway through a port-a-lou queue, I thought of you" specifically actually proves your case that this was not a purchase for yourself, it was a purchase for your wife, because that's quite an obvious thing to buy your wife, and therefore would actually give you some strong evidence that you had bought it for your wife. But you can see all the ifs and buts involved, which is why I'd say if you want that protection and you're using a second card, then just get the first cardholder to buy it if you possibly can.
41:32 Martin Lewis? So who would judge it ultimately? The card firm and then the Financial Ombudsman? And I would think you would win, but it's not guaranteed and it's much more hassle using Section 75.
41:41 Speaker 05 It's a good reason to have your own
41:45 Martin Lewis? Yeah.
41:45 Speaker 05 credit card, isn't it? Not a joint one, but perhaps you could have a situation where, okay, there's one card, and say my wife can have my physical card, and then I can just, I can have it on Apple Pay or whatever and just use it on my phone.
41:59 Martin Lewis? Yeah, I mean technically that's a breach, that's the problem. Technically you can't do that.
42:02 Speaker 05 I wouldn't dream of doing it, don't get me wrong.
42:03 Martin Lewis? I mean, you wouldn't dream of doing, I mean, look, why would you both use this to have the same card? Well, one, because only one of you has a credit score that enables you to get the card. Second, because you might be playing to maximise cash back, you get cash back in a certain card.
42:13 Speaker 05 Well, no, no, it's for joint purchases.
42:16 Martin Lewis? Yeah, but remember, there is no such thing as a joint credit card. This is important to understand. You can have a joint bank account, you can have joint savings, you can have a joint loan, you can't have a joint credit card. There is a, it is only a second cardholder. And on that point, you know, this is why that a joint credit card would not link your credit files, because it isn't, sorry, a second credit card would not link your credit files, because it isn't joint. So it's really, this is what people have to understand. Credit cards are never joint. They're second cardholder and it's the first cardholder's account. So if you played fast and loose with your wife's credit card, she spent the money, even though you were doing the spending. That's, that's how it works legally. It's interesting, isn't it?
42:58 Martin Lewis? Now, back with us after a couple of weeks hiatus is podcast producer Simon and we've got loads more lifetime ISA questions we want to get through Simon. So what have you got for me? Welcome back.
43:09 Speaker 00 Yeah, absolutely. It's a delight to be back. I'd like it on record as well. We were off air earlier today because of Wimbledon, but I've worn a white shirt.
43:15 Martin Lewis? Nice, for Wimbledon.
43:17 Speaker 00 Yeah, yeah, yeah.
43:17 Martin Lewis? Oh, that's very cool. So when I'm doing at the cricket next week, which sadly we couldn't get you a passport because you were desperate to come along.
43:24 Speaker 00 I was. The only reason I took this job is because Lily May says you get to go to the cricket all the time.
43:28 Martin Lewis? Yeah, well, if this happened once in the history of the podcast, you probably exaggerated a little bit. And because you like working with me, surely.
43:34 Speaker 00 Yeah, yeah, yeah. That was an added bonus.
43:36 Martin Lewis? But I am expecting when you're sitting in the studio in Manchester and I'm doing the pod from Lord's next week, you to be wearing pads.
43:41 Speaker 00 Yeah, yeah, yeah. I'll try and remember a helmet.
43:43 Martin Lewis? Pads in a box, please.
43:44 Speaker 00 In case you follow me any googlies.
43:47 Martin Lewis? Right. So let's get on with lifetime ISAs.
43:50 Speaker 00 So, so we've got this one from Derek. My daughter is looking at lifetime ISAs at present. I'd like to clarify if the max £1,000 government input is additional to any interest the provider offers, or is the government input the sole benefit?
44:04 Martin Lewis? No, you get both. So, the 25% bonus you get on a lifetime ISA is a bonus paid on the amount you contribute, so interest is irrelevant. So if you put £1,000 in, you get a 25% bonus, £250 on that. But your money in the account also earns interest paid for by the provider, assuming of course that you have gone for a savings lifetime ISA. The current top ISA savings payers are Moneybox at 4.76% and Plum at 4.75%. Both let you put a pound in. Now, you may think, what if I just want to go to a high-strength bank to get my ISA? Well, it's going to be a struggle because very few of them offer lifetime ISAs
44:48 Martin Lewis? because they're worried over being done for misselling over the retirement element of ISAs, so they've never really opened them. Another big flaw in the structure of the way that ISAs were done in the first place, another thing that needs to be changed, another thing that is in that Treasury report. But again, I don't hold out much hope of it being changed. So you're generally going with smaller FinTech firms, but you still get the full up to £85,000 per person, per financial institution, financial services compensation scheme protection. Worth noting that you can alternatively put money in a lifetime ISA, in an investment, a stocks and shares lifetime ISA. So hopefully you will get more growth. I tend not to do that if you're saving as a first time buyer, because as a first time buyer, it's a short term form of savings. So you just want to keep it in savings and be secure with your money.
45:33 Martin Lewis? But if you were to be doing it for retirement later in life and for once you're aged 60, then because you've got a long time for the money to grow, you would want to be looking generally at putting it in some form of stocks and shares ISA, which will give you hopefully better investment returns over the long term. Of course, it's risk based, so there's no guaranteed. But if you put in a nice spread of assets, the hope is over 20 or 30 years, the investment lifetime ISA or stocks and shares lifetime ISA will outperform a savings lifetime ISA.
46:02 Speaker 00 Perfect. Emma asks, I have one son who has a Help to Buy ISA, but from looking online, he has only until 2030 to use it. What happens if he doesn't use it by then? Does he just get the money back with no interest or does it transfer into another ISA?
46:16 Martin Lewis? No, he'd absolutely be able to keep the interest. We don't yet enough, and he could also move it into a lifetime ISA or he could put it into any other form of cash ISA. What he wouldn't get after that point is the bonus, because the bonus on the Help to Buy ISA is only paid at the point of completion. So if he hasn't completed a house, he wouldn't get the 25%. But the advantage of a Help to Buy ISA is there's no penalty to get your money out. So he can take his money out at any time or he could transfer it into another ISA, into a cash ISA or something like that. But you know what? I will deal with that in more detail once we get to 2030 and we can see if any specific provisions have been put in place. That's the Help to Buy ISA, just to be really clear, the lifetime ISA's predecessor. That's nothing to do, if you've got lifetime ISA, that's not you.
46:57 Speaker 00 Joanne wants to know, what is the maximum government bonus you can get? My children both have ISAs and have three bonus payments, but no payment has been added for the last year.
47:06 Martin Lewis? Well, that sounds like an error. The maximum government bonus is £33,000. You can put up to £4,000 in a lifetime ISA per tax year. That means if you did that, you'd get £1,000 free. You could open a ISA at aged 18 and the bonus is paid until aged 50. So you could have 33 years' worth of bonus, times 1,000 is £33,000. The fact your bonus hasn't been paid this year sounds like it's a problem or a scheduling issue from the bank accumulating it. It is certainly not a you've hit your maximum. So as long as you're talking about the lifetime ISA, not the help to buy ISA, you should continue to get the bonus. Speak to your financial services provider, whoever you got the money with.
47:45 Speaker 00 Mark is asking, after using the ISA balance to purchase a first home, the account remains open, presumably to be used as a retirement saver that can be accessed at the age of 60. Do additional deposits benefit from the 25% top up each year?
47:59 Martin Lewis? Until you are aged 50, any money you contribute to a lifetime ISA gets the bonus added to it. So yes is the answer. If you were to buy a house at 35 and you were to continue to put money in it towards your retirement, you would get the 25% bonus on top. So it's worth me going into now, a question I get asked a lot. Is a ISA worth using for retirement savings? Well, I should be technical having just asked that question to then rebut my own question. Technically, it isn't linked to retirement. You can use the money in a lifetime ISA and get the bonus without penalty once you're aged 60. So it's not state pension age. The problem with this is no one has yet got to that point. No one who has a ISA has got to age 60 because it started in 2017
48:44 Martin Lewis? and the oldest you can now be, if you got one, you'd be 39 then, would be 48 now. So we haven't got there. The general rule, though, is if you're an employee... A pension smacks the pants off a LISA for retirement savings. Because when you put money in a pension, first of all, it comes from pre-tax salary. But also, your employer, if you're going through the auto-enrollment system, has to match contributions. The minimum is 8% contribution, of which 5 percentage points of that, so 5 of the 8, you would contribute as a minimum, and 3% your employer would match on top. So it's giving you money towards your pension if you do it through that system. That smacks the pants off a lifetime ISA. In general, if you're self-employed, as a higher or top-rate taxpayer,
49:28 Martin Lewis? the tax benefit in a pension would easily outweigh, in most cases, a lifetime ISA. So just in simple terms, if you're a high-rate taxpayer and you put £100 towards your pension, because it's coming from pre-tax salary, you only lose £60 in your pay packet. So you get a £100 investment for a loss of £60 in your pay packet. Where LISAs start to come into their own for retirement is, of course, for anyone who's used up their pension or doesn't have access to one for some reason, or if you're a basic-rate taxpayer. If you're a basic-rate taxpayer, LISAs can be an option. Now, one important point to note that's in the Treasury Committee report that they raised
50:06 Martin Lewis? is money you put into a lifetime ISA can impact your eligibility to universal credit if you're on benefits. Because if you have savings, that can reduce your benefits, and lifetime ISAs counter savings. And they're suggesting it shouldn't, because pension savings don't counter savings. So money in your pension doesn't reduce your universal credit eligibility. Money in your lifetime ISA does reduce your universal credit eligibility. Now, I should say at this point, I've always said it's, you know, it's roughly akin, pension versus lifetime ISA savings, pros and cons. I had a bit of a ruck when I was giving evidence to the Treasury Committee with a man called Michael Johnson, who was on the panel next to me. He was one of the people who had invented the lifetime ISA. And actually, I think he had an interesting viewpoint on his calculations over the lifetime ISA.
50:51 Martin Lewis? So I'm going to read to you what he said. He said, "I disagree fundamentally with something that Mr Lewis has said, because it's factually wrong. The majority of the people in this country are basic-rate taxpayers while working and will become basic-rate taxpayers in retirement." If one has a choice between a lifetime ISA and a pension product with identical investment in the two, the lifetime ISA will produce unambiguously a 17.6% better return. Full stop. So he's talking identical investments, of course, investment choice matters. This is because of the differences in the tax treatment. Up front, the tax relief and the bonus are economically equivalent, and this is the first point about a communication challenge. A 25% bonus on a lifetime ISA is the same as 20% tax relief. At the rear end, when one is drawing down and withdrawing funds, the lifetime ISA is
51:36 Martin Lewis? entirely free of tax. Of the pension box, 25% is tax-free, the other 75% will be taxed at 20%. For the vast majority of people who are basic-rate taxpayers, that results in a 17.6% better return for holding a lifetime ISA. Now, I think that's interesting and good information. I won't go into the fact that I'd actually been talking about in general pension savings through an employer, and the vast majority of people do have their pensions through an employer, will easily beat off lifetime ISAs and the higher-rate taxpayer. And of course, there's a big caveat in here that what he's saying is, if you're a basic-rate taxpayer and you remain a basic-rate taxpayer once you get into your retirement, then the lifetime ISA is materially better. Good fact, I'll put it across. I'm not quite sure if you're putting exactly what I said, but that's not the point of
52:20 Martin Lewis? this podcast, I wanted to give you that information. So, is it worth saving for your retirement in? According to Mr Johnson, for many people who are basic-rate taxpayers, and if you're going to be a basic-rate taxpayer, once you get your income, like your pension income, once you are in retirement, it can easily beat a pension. That was his evidence, anyway. I'll let you check that out for yourself. What's next, Simon?
52:39 Speaker 00 Well, Julie actually has a question that's kind of related to this. She asks, why is there an age restriction and why are they called lifetime ISAs if I can't open one at any stage of my life? She's now 56.
52:50 Martin Lewis? Because those are the rules. It is age discrimination, it's legal age discrimination, because it's done by a statute, it was set up in the rules there, because that's when George Osborne, who set up the lifetime ISA, as he's dipping his toe in the water, hoping people would use it because it would save the state money on pensions, and actually, in an accounting ruse, it would make it look cheaper for pension to save the state money than otherwise, that's the rules he put in place when he set it up. You'd have to ask George Osborne, I can only explain how they work now.
53:16 Speaker 00 George, you are always welcome on the pod.
53:18 Martin Lewis? Always.
53:19 Speaker 00 Tom wants to know, he has a LISA, and thanks you for advocating for them. Having used last year's limit, he'd assumed he'd be locked into that provider. My question is... Do the rules about transferring an ISA across and still using this year's allowance still apply to LISAs?
53:35 Martin Lewis? Absolutely, you can absolutely transfer your LISA to another LISA provider. The way you do it is you apply to open a new LISA and you fill in the transfer form and they will move it across. You are not locked into one LISA provider. Just if we're being interesting, you can have LISAs with more than one provider, you just can't contribute to more than one provider in a tax year. So you could open a new LISA with a new provider of safer investments as well as having a LISA, a cash LISA for savings. You can only contribute to one in the tax year, you can only open one in the tax year, but if you had a cash LISA, you could open an investment LISA this year. It will make it technically more difficult when you come to using it at the end, having two though. But in general, yes, you are free to transfer them, don't feel locked in if you can get
54:16 Martin Lewis? a better interest rate elsewhere, absolutely ditch and transfer your LISA.
54:21 Speaker 00 Crofty, should I still be adding to my LISA if I'm hoping to buy in London one day?
54:26 Martin Lewis? If it looks like you're going to buy over £450,000, you probably should not be adding to your LISA, unless you want to use it for retirement, because I don't see the rules being changed at the moment. I hope I'm wrong, but I don't see them being changed at the moment.
54:39 Speaker 00 Laura wants to know, with Rachel Reeves making changes to the cash ISA allowance, are there any changes being made that will affect the LISA allowance?
54:48 Martin Lewis? I don't see that coming at the Mansion House speech on the 15th of July, but absolutely, there was this Treasury Committee report that the government will have to respond to. So the Treasury Committee is a cross-party group of MPs, but it's led by a Labour MP and there are Labour MPs on the panel. Within that, they criticised quite a few things, the big one being LISA's value for money and whether LISAs are well targeted enough, as well as the sort of, you know, the withdrawal penalty I discussed earlier and the universal credit issues. Now, that's interesting, isn't it? LISA's value for money and are they well targeted enough? In other words, the state is funding first-time buyers, is it funding the right first-time buyers, is it funding too much in there?
55:29 Martin Lewis? And once you start to open that door, I mean, it does raise questions as to the future of the lifetime ISA as a product. I wouldn't be too worried if I already had a lifetime ISA and we're putting money in there. We don't know what will happen to it in future, but I think they tend not to suddenly change the way it operates retrospectively. But they may well look at changing the rules for money being put in in future. I don't think it's a very strongly likelihood of it being ripped apart, but I think there is still a potential in the back of this Treasury report to maybe change some of the qualifying criteria for new people setting it up, or change the generosity of the free money that's going in. So, things are up for grab. Nothing is set for certain. We have a new government, would be my general answer to that. And you might want to go and look at that Treasury report.
56:13 Speaker 00 Ian wants to know, is it worth opening a LISA before I turn 14 September, even with a small amount, even though I'm not in a position to seriously save anything yet?
56:22 Martin Lewis? Yes, yes, yes, yes, yes, yes, yes. You should be opening a LISA at least the day before your 40th birthday and putting a pound in it. That gives you the facility to use a LISA later if you want it. You just put a pound in it, you might never want to use it, but you never know. The bonus is still paid up until age 50. Something may happen that you want that facility. Why would you close yourself out of the facility of having a lifetime ISA, when all you have to do is put a pound in there, earn interest on your pound to do so, and therefore you can use it whenever you want in future. So, definitely, if you are in your late 30s now, you've never bought a house, or even if you have, because you might want it for retirement savings, go and dosh yourself a pound into a lifetime ISA.
57:02 Speaker 00 And Kazza, why does inheriting a property count as being a first-time buyer for a LISA? Does inheriting only part of a property also count? What if the property goes into a trust for a disabled sibling?
57:14 Martin Lewis? Why does it count? Because the rules say so. Sorry, I don't have a better answer than that. Those are the lifetime ISA rules. Does inheriting part of a property count? Yes, I'm afraid it does. The rules on a trust will depend exactly on the ownership of that trust and how that trust has been set up. My suspicion is the answer is yes, but you would need to talk to your trust provider about that. I can't answer that question without more specifics, I'm afraid. Probably even with more specifics, I would have to go and ask someone who deals with trusts for advice on it. It's not my area, the trust side. Apologies.
57:44 Speaker 00 That is all our LISA questions.
57:46 Martin Lewis? Phew! Well, well done. Whether it's LISA or LISA, we got there in the end.
57:55 Martin Lewis? And that is it for this week. If you've enjoyed it, please tell your friends you've been listening to the Martin Lewis podcast. Do also suggest any eighteen to thirty nines or their parents it's relevant for. Listen to this specific Lifetime ISIS podcast, there is big money in it. We tend to put out a new episode of the pod every Thursday, so do subscribe to keep up to date and then your pockets will be pleased with you. And if you've not enjoyed it and you're still niggling to this point, then it's your own fault, so...
58:41 Speaker 03 Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing [email protected] . The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.
59:16 Speaker 03 BBC Sounds, music, radio, podcasts.
59:26 Speaker 02 Welcome to The Haunted Library. Join me, Colin Morgan, as I read Frankenstein by Mary Shelley. A story of science and ambition, loneliness and longing, and what it truly means to be human. Listen to The Haunted Library wherever you get your podcasts, or find us on YouTube.
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