Pod Insights The Martin Lewis Podcast Lifetime ISA, is the free £1,000/yr still worth it? | Your insider MoneySaving tips About this episode The big topic in this pod is Lifetime ISAs, LISAs give up to £1,000 a year bonus for first time buyers, but there are pitfalls to watch too. With the ISA year about to end, Martin Lewis runs through how they work and how best to use them in detail.
Martin also explains the LISA's predecessor the Help to Buy ISA and which is best. He also goes through the best options currently on the market.
Plus why are vulnerable people made to declare their issues to firm after firm, isn’t it time we stopped that?
This week’s Tell Us is about insider tips you learned from your work that can help others, we’ve brilliant ones from doctors, techies, accountants, electric installers, supermarket, hospitality workers and more.
And this week’s Mastermind is all about pensions.
If you want to ask Martin a question, you now can! His Question Time podcast lets you ask Martin absolutely anything and everything (within reason!) – so if you’ve always wanted to know what colour his eyes are, what he's planning to do in his eventual retirement, or have a very complicated question about your personal finances, email it to [email protected] mailto:[email protected] .
Transcript 10,288 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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0:05 Speaker 01 In Our Time is a world-class seminar every week. Why was Jeremy a lonely snail? What were lines doing in York in the third century? I'm Misha Glennie and every week I'm joined by expert guests to explore the ideas that shape our world.
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0:40 Martin Lewis? That just isn't healthy for people. And it's not healthy for the service. And it's what we're calling for. It's one of those no brainers, you know. There are many women missing out on that one and it is a big weight to say. God, it's complicated. And now having to pay a fine, a penalty to the state. That is a completely full answer on the Help to Buy ISA versus Lifetime ISA. 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 my BBC Radio 5 Live show with Adrian Childs, but there's also bonus money-saving tips just for you lucky, lucky podcast listeners. In today's pod, the big topic is Lifetime ISAs or LISAs, where you can get up to a thousand pound a year bonus towards your first property.
1:25 Martin Lewis? But there are big pitfalls to watch too. And with the ISA year about to end, I'm going to run through in detail how they work and how to best take advantage of them, or maybe when you should avoid them. Many too want to know about the LISAs predecessor, the Help to Buy ISA, and which one of the two is best. I'll give you the runners and riders on that as well. And of course, you'll want the best buy, so I'll be going through all of those for LISAs and Help to Buy ISAs at the end of the pod. Plus, why are vulnerable people made to declare their issues to firm after firm when it's often emotionally difficult and even triggering? Isn't it time that we stopped all that? This week's tellers is about insider tips that you learnt from your work that can help others.
2:07 Martin Lewis? We've got brilliant ones from doctors, techies, accountants, electrical installers, supermarket workers, hospitality workers and far more, so must listen. And this week's mastermind, well, it's all about pensions. Play the theme tune.
2:43 Speaker 05 So Tell Us Once is an interesting one, Martin. You don't know about it until you're bereaved and then it's about the one thing that goes smoothly. That seems to work properly when you're dealing with a bereavement. Is this Tell Us Once system?
2:58 Martin Lewis? Yeah, so the government has a Tell Us Once system for different government agencies when someone dies. I'm actually talking about something different.
3:06 Speaker 05 Yeah.
3:06 Martin Lewis? I'm talking about when people are alive. And now this is a policy that we have researched from my Money and Mental Health Policy Institute charity. And we put out a policy paper that we're now starting to lobby on. This is about the fact that we need a single, simple system that can work across essential services like banks, energy and water firms and government systems too, whichever people choose. It's all about choice. It's not about mandating. Because right now, if someone's vulnerable, if they're in the middle of a mental or physical health crisis, though obviously we're a mental health charity, so that's our core focus. They may have to call up firm after firm, government agency after government agency,
3:49 Martin Lewis? repeating the same painful, possibly embarrassing, almost certainly triggering explanation again and again. And that just isn't healthy for people.
3:59 Speaker 05 That's incredible.
4:00 Martin Lewis? And it's not healthy for the service. And in a digital age where data sharing is simple, it feels to me almost cruel. So what we're asking for is first of all that there is a Share Once Support Register built up, which would allow people to share information about their health system in a simpler way, while protecting their privacy, including all essential services, banking, energy, telecoms and water. And that providers are required to take part to avoid gaps in the scheme where you'd still have to notify some firms separately. Although of course, providers would still have to offer help. For those who don't want to use the Share One scheme. And ensure that there's a redress system in place so people can complain about the scheme if it's not working properly. Now, of course, the the underlying issue here is privacy and data.
4:43 Martin Lewis? Which is why this is only a voluntary scheme. No one should be mandated to do it. That would go against the way that we work. Obviously, people who have mental health issues, that they can worry about many different things. And we don't want people worrying about it. But I put out a video on social media about this scheme and I have been swamped. With people giving how it would have helped them. When they were suffering problems and it's what we're calling for. It's one of those no brainers, you know.
5:07 Speaker 05 And which kind of agencies we talking about? Just give us a flavour, fat. Just how many there can be.
5:11 Martin Lewis? Oh, I mean, you're talking the Department for Welfare, you're talking Child Benefit, you're talking Child Support Agency. Anything that's governmental or non-governmental, plus. Banks, savings providers, energy firms, telecoms firms, water, all those essential services. And your local councils too. All of them, many of them are mandated to have. The equivalent of a priority services register where they have to treat. Vulnerable customers in specific ways under certainly under the regulated utilities. And yet, we make it difficult for people to say that I am vulnerable. I should be on that priority services register. Now, look, we're not getting into definitions at the moment about who can put themselves on this list and who can't put themselves on this list.
5:55 Martin Lewis? This is about the principled idea. That in a modern, digital-driven society. To make people call again, again, again, again, again, or fill out a form again, again, again, again, again, when they're in the middle. Of a mental or physical health crisis. And also neurodiversity comes into this as well, that makes things admin difficult and processing things difficult. It's just, I mean, it's a little bit cruel. And it's time that we started to use data. For compassionate reasons rather than just profitability reasons. And that's why. The charity and of which I'm the chair of, that's why we're calling for this to happen.
6:30 Speaker 05 So it might we're saying just very briefly, as it stands, is there anybody who can help you with this?
6:36 Martin Lewis? No, you're each different utility you're going to separately.
6:39 Speaker 05 Extraordinary.
6:40 Martin Lewis? Right, there is, and and look. I say it's simple, the idea is simple. Doing it isn't. So data sharing is governed by very complicated rules. You have a lot of privacy issues that are involved in how you do this. There are permissions issues, there's data security when you get in there. There's who will run this? For me, it has to be either central government or by a non-governmental authority. You can't, you don't really want it to be done by private firms particularly. Although there are, you know, Experian does have a small system that works with some of its companies in notification. But all these rules and regulations need to come in. So it's a simple idea.
7:21 Martin Lewis? It isn't a simple thing to set up, which is why it needs to sort of be lobbied from the start to try and get things to change. Because to make this work and to make it compulsory and to make it a licence obligation for any regulated utilities and other regulated sectors is a big job. This isn't coming quickly, but it is something that we should be looking to do and I would hope to see it. We'd be wishing to see it in the next five to 10 years, but it's that type of timescale.
7:49 Speaker 05 Okay, let's get to our main topic then. Lifetime ISAs, Help to Buy ISAs. Before we get on to them, some background then. What are they and how do they work?
7:59 Martin Lewis? Yeah, so we're going to start with the first time buyers ISAs. Let's talk about the lifetime ISA because the lifetime ISA is the one that is live right now. You can't open a Help to Buy ISA. It's the prior product before the lifetime ISA. Many people have helped to buy ISAs, but you can't get one. So in a nutshell, a lifetime ISA allows first time buyers to save up to £4,000 each tax year. And the state adds 25% on top. So that's a maximum £1,000 of free cash every tax year. Now, that can be used towards a first time property or it can be saved and kept until you're aged 60. So effectively, another form of retirement savings. Lifetime ISAs are only openable when you're aged 18 to 39.
8:43 Martin Lewis? Though, once you have one, the bonus can be paid each year until you're 50. You can only get the 25% bonus if it's been open a year. So if you don't have one, as I always say, put a pound in one now just in case to get the clock started. Just, you know, you might not use it, but hey, it's a quid. You get a quid, you have the account open, it's been done a year. Then in a year's time, if you need to use it quickly, you can. It's only for residential mortgages and it's only for properties under £450,000. You can't do it on buy to let. Sadly, that £450,000 has not moved since LISAs were launched in 2017. It's been frozen and that is causing some problems. People are being priced out. So you have to think carefully. Am I definitely going to be buying a house, if you're using it for a first time by a purpose
9:28 Martin Lewis? anyway, under £450,000? Because if you withdraw the money for any other reason than buying a qualifying house or home, which is a property under £450,000, or until you're aged 60, if you take it out for any other reason, there's effectively a 6.25% fine for withdrawing your money. So you've got £10,000 in there, you're only getting back £9,375. That's the problem. So you want to be absolutely certain you're using it for the right purpose. And that is the LISA in a nutshell. It is a brilliant product if it works for you. It's a nightmare product if it doesn't. So you've got to be really certain about it. But in many people, I've had thousands of people over the years who've bought their
10:11 Martin Lewis? home, who've had two, three, four thousand pounds, free money on top of what they saved towards a deposit, and they love the lifetime ISA. You've just got to be a bit careful with it. Now, I've just interrupted this to admit, when I listened back, I realised I'd done a naughty. I was interchanging the word property and house. And of course, the rules for a lifetime ISA and Helped by ISA is you can use it on any residential property. It could be a house, it could be a flat, it could be anything else, as long as it's a residential property. So if you hear me saying house, think of that as home or property in your head afterwards. Sorry.
10:47 Speaker 05 So if you do, you take the money out to use it for another purpose, do you lose the bonus? Or do you just, do you keep the bonus, but you just get, you get the fine?
10:56 Martin Lewis? Get your calculator out.
10:57 Speaker 05 Right.
10:58 Martin Lewis? Have you got it?
10:59 Speaker 05 Yep.
11:00 Martin Lewis? Here's how it works. You get a 25% bonus each month on money you have put in, not on the interest, just money you've put in. If you withdraw the money, you get 25% taken off. So put £10,000 in your calculator. Times it by 1.25, which means we're adding 25%. What have you got?
11:19 Speaker 05 I've got £12,500.
11:21 Martin Lewis? Times that by 0.75, which means we're taking off 25%. What have you got?
11:27 Speaker 05 Nine thousand three hundred and seventy five.
11:29 Martin Lewis? That's where that fine comes from. So twenty five percent on, then twenty five percent off is the effective six point two five percent fine. So you do keep the bonus, but you get a twenty five percent fine. But that confuses people if I say, because if I say you get twenty five percent added on and twenty five percent taken off, most people go, oh, so I'll go back to where I started. But it doesn't work like that because the twenty five percent on is on top of a smaller number than the twenty five percent off is taken off, which is why I phrase it as an effective six point two five percent fine. But actually, your question was brilliant for explaining it, so thank you.
12:05 Speaker 05 You're very welcome. But is there a deadline on these?
12:08 Martin Lewis? Yeah, absolutely. As always, as with all ISAs, this is about money you can put in during the tax year. It doesn't actually apply to the Help to Buy ISAs, it's only for the lifetime ISA. We'll come on to Help to Buy later, I'm sure. I know we've got loads of questions on it. So you can put in up to four thousand pounds per tax year. The tax year closes on the fifth of April. So if you haven't maxed it out, you've got the money to do so and doing it is right for you, make sure you get your money in soon because if you don't use this year's allowance, you lose it, you'll still have next year's, but that might mean that you've got money you haven't put in a lifetime ISA that you can't get your twenty five percent bonus put on top of.
12:41 Speaker 05 And we might get to these in the questions, but how does it stand next to any other ISAs that you've got?
12:47 Martin Lewis? Very simply, you are allowed to put twenty thousand pounds into ISAs within a tax year. Money put into a lifetime ISA and you can have cash or shares lifetime ISAs counts towards that twenty thousand pounds. So if you put four thousand pounds in a lifetime ISA, your remaining ISA allowance for a cash ISA or a shares ISA, because you have to be over eighteen to open any of these, would be sixteen thousand pounds. Does that make sense? That's how it works. Shall we do some questions?
13:14 Speaker 05 Let's do some questions.
13:15 Martin Lewis? We have loads of them.
13:17 Speaker 05 I'm currently planning to a lifetime ISA, says Michael. What happens if I get married and my spouse is a homeowner? Can I use my lifetime ISA to pay off their mortgage or to put down a deposit on the next house? Or is it locked away until I'm sixty? I'm hoping the review shakes out okay.
13:35 Martin Lewis? Right, so generally, your lifetime ISA is for buying a new house with a mortgage. Now, the fact that your partner is a homeowner is irrelevant, and people always ask this, so let's do the simple thing. Lifetime ISAs are an individual product. So two first-time buyers could have one each if they were buying together. A first-time buyer buying with somebody who has already owned or part-owned a property anywhere in the world before, the first-time buyer could still use their lifetime ISA, even if they're buying with someone who isn't a first-time buyer. These are independent products. It's about your status, not about the status of anyone that you're buying with.
14:16 Martin Lewis? So if you were to use it to put down a deposit for your next house, yes, absolutely. The fact that your spouse has owned a property does not stop you using the lifetime ISA. Where it gets much more difficult is using your ISA to pay off their mortgage. You can only get a ISA when you're getting a mortgage. You can't use it to pay off someone else's mortgage. It has to be done via a convincing solicitor. They're the one who triggers you getting the lifetime ISA bonus and it all being paid out, and it's paid at the point of exchange and the ISA provider. So no, I mean, what could happen if, and you'd need to talk to a solicitor about this, but I'm just mulling this off the top of my head.
14:59 Martin Lewis? If, Michael, your spouse wanted to sell you half of the property and you got a mortgage on it, so it would count as a disposable from their purposes, it may, in some circumstances, be possible to use the ISA on the mortgage that you get for buying their part of the property off them, but that's very convoluted and you probably won't want to do it. So you'd be best to use their ISA on the next property that you buy together when you're a first-time buyer and they're not. You mentioned the ISA review at the end, just to mention that. So it's important for everybody to understand that in the last budget, the Chancellor said that she wanted to get rid and replace the lifetime ISA. I think she wants to get rid of the retirement element, the saving till age 60 element. There's meant to be a consultation.
15:44 Martin Lewis? Going on at the moment, I think they're looking at it. I haven't had my meeting about it yet, but it is due relatively soon. And we expect to hear more in the middle of this year. Big picture, certainly if you're looking to buy a house, the LISA will almost certainly stay open. So if it's right for you now, it will be right for you in future. It may be the other product will be even better. We don't know that yet. But if you've got a LISA now, you may as well keep putting money into it. They're not going to close down that element. The chance has been very plain. You can keep using it and it should still work for you. I think it's more questionable on the retirement side. Although, and I wasn't going to go here now, but I'll go here now. Although I would say the LISA for retirement is generally not as good as a pension for most people. But there are certain circumstances where it's good.
16:29 Martin Lewis? Clearly, they're going to, at some point in the future, close down the LISA to new applicants. And just in case the retirement element is good for you. If you are aged between 18 to 39 and have bought a house, and so therefore you've got no need for a LISA as a first time buyer. I would also be tempted to put one pound in a lifetime ISA. Just in case at some point in the future, the LISA was good for your retirement plannings, but you can no longer open it. And obviously, there's a caveat there that they still allow you to do it for the retirement savings as somebody new opening it, which I don't know. But hey, again, it's only a quid. And your maximum loss, if you want to take it out, is six and a quarter percent. So you're gambling six and a quarter pence on it. I think as a, as a, to give you the facility,
17:15 Martin Lewis? just open up a LISA so you've got one just in case it might be useful to you in future. Sorry, that was a very long answer to one question.
17:21 Speaker 05 Francesca, if I transfer money, um, 4K limit from an existing cash ISA into my LISA, when the allowance resets in April, does this come out of the 20K allowance for next year for 26, 27? Therefore, will I only have 16K allowance remaining to add to my cash and stocks and shares ISAs?
17:42 Martin Lewis? What an interesting question, Francesca. Okay. So it's really interesting this because I'm just thinking it through as I go. If you transfer next year, we're in next year's ISA allowance, just make it simple. If you transfer money from an existing cash ISA into a lifetime ISA, and you transfer the £4,000, you have used up next year's LISA allowance. But as that isn't new money, it isn't using up any of your £20,000 ISA allowance.
18:12 Martin Lewis? So if you transfer money into your LISA next year from an existing cash ISA, that will use up your LISA allowance, but you will still have £20,000 that you could put into other cash and shares ISAs. If it were new money you were putting into your LISA, you would only have £16,000 you can put in the cash and shares ISA. I like that one, Adrian, I enjoyed that, thank you.
18:34 Speaker 05 Sue, should you transfer a Help to Buy into a LISA? God, it's complicated, I tell you, it's mad.
18:40 Martin Lewis? Do you know, if we were on QI, Adrian, that would, what's the sound it makes? You know, when you say something that's like, that's my most expected question. Is it, ahh?
18:50 Speaker 05 Yeah.
18:51 Martin Lewis? Yeah, I mean, that's just got an
18:55 Martin Lewis? from me, that was the question I was waiting for. So I'm going to go to my notes on this because this, get ready, let's strap yourselves in, everyone, we are about to cover Help to Buy ISA versus LISA. Okay, so, the lifetime ISA and the Help to Buy ISA are similar for first time buyers. The Help to Buy ISA you couldn't use for retirement savings. Both of them give you a 25% bonus on the amount of money that you have put in. You can have both a Help to Buy ISA and a lifetime ISA, but you can only get the first time buyer's bonus on one of them. So you can't get the bonus on both. So we're assuming that you're going to be a first time buyer and we're looking at the differences. Let me run through them.
19:38 Martin Lewis? You can put more in a lifetime ISA, you can put up to £4,000 a year in a lifetime ISA. In a Help to Buy ISA, you can only put £2,400 a year in, and that has to be done monthly. You can't put lump sums in like you can with a lifetime ISA. So the fact that you can put more in a lifetime ISA is important because you get a 25% bonus based on what you put in. So if you can put more in, then you can get a bigger bonus. Plus, the Help to Buy ISA limits you to a maximum bonus of £3,000. The lifetime ISA says you can have a £1,000 bonus every year until you're 50, which could mean if you started at 18, a maximum bonus, if you maxed it out, and I'm not quite sure
20:18 Martin Lewis? why you do this unless you're saving for retirement, of £33,000 of money from the state, your bonus from the state. The lifetime ISA bonus can be used at exchange. So when you exchange contracts and you're giving your deposit to the person you're buying off, you can use the lifetime ISA bonus then. With the Help to Buy ISA, you have to wait till completion. So it doesn't help you in the deposit that you want to give the people that you're buying off. It only helps you in the deposit for your mortgage. So again, lifetime ISA wins. You can hear so far, everything I've said, you're going, "Lifetime ISA is the winner." But we're not there. Lifetime ISA, you can have in stocks and shares, LISAs. Help to Buy ISA, only cash savings.
21:04 Martin Lewis? The really big one on the lifetime ISA, you can use it for a property worth up to £450,000 anywhere in the UK. The Help to Buy ISA is a £250,000 cap, except in London, where it's £450,000.
21:20 Martin Lewis? The big difference, though, is all about taking the money out. So this is where the Help to Buy ISA has its one big thing. You can take your money out of the Help to Buy ISA and get the interest. You don't get the bonus at any point you like without any penalty. So if you've got £10,000 in your Help to Buy ISA, you can take £10,000 out whenever you want. If you've got £10,000 in your lifetime ISA and you're taking it out other than buying a qualifying property or leaving it till age 60, you're only taking out £9,375. So the lifetime ISA has a bigger bonus. It can be used on a bigger property. It works in a much more effective way.
22:02 Martin Lewis? But the Help to Buy ISA is more flexible. And therefore, if you are not definitely going to be buying a qualifying property under £450,000, then you probably want to stick with the Help to Buy ISA. Has that made sense so far?
22:21 Speaker 05 That has made sense so far.
22:22 Martin Lewis? So now let me go into a little bit more detail on this.
22:25 Speaker 05 Blimey, there's more.
22:26 Martin Lewis? There's more. Let me just go through the who should do what. If you have a Help to Buy ISA, should I move my money to a lifetime ISA? Well, if you're buying a house over £450,000, and that's what's likely to happen, it's an absolute no, unless you want to use it for retirement savings, because effectively you're locking your money away with a potential penalty if you moved it to the lifetime ISA. If you are looking to buy a house that costs between £250,000 and £450,000 outside of London, and you're not buying within the first year that you're going to do this, or you've already got a lifetime ISA open, then yes, you would probably want to move your money from your Help to Buy ISA into the lifetime ISA, because you can't get
23:10 Martin Lewis? the bonus on the Help to Buy ISA on a property over £250,000. You can get the bonus on a lifetime ISA for a property over £250,000. So even if you had £10,000 in your Help to Buy ISA and you could only move £4,000 across, you would still want to do it because you're just not going to get the bonus on the Help to Buy ISA.
23:28 Martin Lewis? Then we get the tricky bit, which is if you are looking to buy a house under £250,000. So in this area, you can use both the Help to Buy ISA and the lifetime ISA to get the bonus. The advantage of the lifetime ISA is you can put more in. The advantage of the Help to Buy ISA is you've already got the money in and you can only move across £4,000 in a tax year by transferring it. So if you had four grand or less and didn't have any more money to put in your lifetime ISA, you may as well move it to the lifetime ISA. But if you've already got close to maxing out your Help to Buy ISA, let's say you've got 10 grand in there, well, it's going to take you at least two and a half tax years before you can get it into the lifetime ISA. So if you're planning to buy before that,
24:11 Martin Lewis? you may as well keep it in the Help to Buy ISA because you're not going to be able to put as much money into the lifetime ISA. So if it's a house under £250,000, the real question is, where are you going to be able to have the most money when you come to buying it? And I think that is a completely full answer on the Help to Buy ISA versus lifetime ISA.
24:31 Martin Lewis? And that's just the start of your lifetime ISA and Help to Buy ISA questions. But we're going to change subject just for a minute and get into the tellers, a really fascinating one this week. Lots of great responses. Thanks so much to everyone who got in touch.
24:47 Martin Lewis? So this week's tell us is what tips have you picked up from your current or past jobs that would save others money? We want specialist insider knowledge from your specific job. And we've got loads of good ones. Why don't you start because my voice is going?
24:59 Speaker 05 Okay, we've got an ex HMRC inspector. Keep your records, your documents, receipts, et cetera. Not only will it help with taxes, but with everything else in life. Warranty claims, faulty goods, insurance claims, the more records you keep and the more comprehensive they are, the better. Will save you time and money in the long run. But to keep all this paraphernalia, you need formidable organisational skills and a hell of a filing cabinet.
25:25 Martin Lewis? Or a camera.
25:26 Speaker 05 Or a camera.
25:27 Martin Lewis? On your phone. And you just take a picture of the documents and you put them in a file and you make sure that it's saved on your computer. Now, the reason I also strongly support this, I have a blog I've written on this and I first wrote it about 12 years ago and boys, it turned out to be right. The blog said that while you're generally advised only to keep documents for four to six years and keep statements for 46 years, we don't know what the future misselling cases will be. We don't know what products you've signed up for now, there will be some campaign where you can get your money back in future. And if you don't have the documentation, it's a lot harder to get money back. And this is all played out with the car finance reclaiming right now. So those who've got their documents back from 2007 will find it a lot easier to get their money back than those who don't.
26:10 Martin Lewis? So I would always, whenever you sign up for any financial document, I'd take a photo of it, I'd store it on your computer, I'd have it in a file. You never need to look at it again. It's not using, you know, the data cost is irrelevant because it's just a document, but you never know when you might need it in future. So I'm with the ex HMRC inspector. Why don't you do the next one then?
26:28 Speaker 05 Trev, I worked in a big supermarket when I was at school. Always take any chilled perishable goods from the back of the display. They fill them up from the back, so the stock at the back has the longest sell by dates on them.
26:40 Martin Lewis? Absolutely right, yes. I have to say I do that on occasion too. Not if I'm not looking for, if I know I'm going to use it that day, I don't bother because I think I'll let someone else have it.
26:47 Speaker 05 Yeah.
26:48 Martin Lewis? But if I'm otherwise, you want it to keep, use the long arm, the long arm of the reach. James, I'm a web developer. I tell anyone I can to use a password manager to store not only passwords, but also account info for banks, utilities, et cetera. Not only will it help keep you secure, but if you give emergency access to someone you trust, they're like a tool, like a lasting power of attorney or a will. Yeah, I mean, it is really useful. We talked about in the other week, having a financial fact sheet that somebody you love can take over. And if you do it through a password manager, as long as you trust them, and trust is a big thing, then I could see that working.
27:24 Speaker 05 Jamie, having worked in hospitality, stop buying soft drinks in restaurants. The markup is shocking. And doing this will massively reduce your bill. Jugs of tap water for the table. This is so true. The economics are fascinating. A friend of mine was a maître d' in a famous restaurant. And if they could get each table to order one bottle of still and one bottle of fizzy mineral water, and all have coffees at the end, that meant they were definitely in profit for that table. The markup's all in the water.
27:54 Martin Lewis? Yeah, the water, water and pasta. That's why there are often pasta dishes. Pasta costs nothing to make, but it can be expensive on a menu. It's where all the markup is. Louise, I worked in libraries. Use them. They have more than just books. Free eBooks and audiobooks, free magazines and newspapers, free access to specialist websites, genealogy, academic research, school resources, free or low cost events and activities. Absolutely. Support your local library, folks.
28:20 Speaker 05 And this one, I learnt this one from you, Martin. Steve says, I worked in pharmaceutical research and development. Generic medicines are identical to branded products, e.g. a two pound fifty pack of Panadol versus a thirty five p pack of supermarket Paracetamol. No difference.
28:36 Martin Lewis? Quite right. It's the active ingredient that does the job. So if it has the same active ingredient, it's doing the same job. Now, occasionally, there can be certain other things that can make it quick release. But even more so, what we've done research, if you look at the P L code, which is the product licence code, you can simply find in some pharmacies, different pharmaceuticals, like hay fever tablets. One might be an own brand at half the price of the branded one, but they have the same P L code. Then it's not just the same active ingredient, it's absolutely the same stuff. It's the same tablet inside with the P L code. And interestingly, where we are now, not in this country, but in other countries, all the, the Fat Jab jabs, some of those are starting to come off trademark
29:20 Martin Lewis? now. So they're going, so they'll be able to be made. Generic and will be a lot cheaper, not in the UK yet though, but that will be the next one. And that will massively bring the price down because of course, all of that initial cost is going into the research and development. The pharmaceutical companies are put in, but after a while they lose their protection and then actually making these things is pretty cheap. Often, which is why the generics are a lot cheaper because they haven't got the price of the brand in it. Go on, I've spoken a lot, you better do the next.
29:44 Speaker 05 Anna, being a doctor for over thirty years and a GP for twenty five, there is now no way I would be without health insurance. Faintly depressing to read, cover for the big stuff and with a mutual health insurance company as a minimum, being on a waiting list for a year. Has many costs.
30:00 Martin Lewis? I certainly think many people underestimate healthcare cash pack schemes, which is what she's talking about, mutual health cover. What these are, these are plans where you get dental or optical, even on the NHS, anything you're paying for on the NHS or private. And then you take your receipts at the end and they refund you up to a certain limit. So you might have a hundred and thirty pounds of dental cover, a hundred and fifty pounds of optical cover, a hundred and fifty pounds of physiotherapy in a year. So you pay and then you claim back on your receipts and if you're the type of person who is, you know, up to it and claims back. If you're the type who forgets it's not worth it, they can be worth their weight in gold and you can make far more money in a year than you pay into them. Jonathan, I work in gas electricity customer service.
30:42 Martin Lewis? If you have an old style prepayment key card meter, it won't update the price change until you enter the key. If prices go up, top up as much as you can the day before to maximise the current price. If prices go down, top up immediately, yeah, immediately afterwards. Interestingly, that's one of my tips. I'm going to slightly disagree, Jonathan, I'm so sorry. I believe that only works on non-smart electricity prepayment meters. It doesn't work that way on non-smart gas prepayment meters. Because they back calculate to the date of the price change because it's a slightly different technology, but absolutely right on the electricity meters.
31:18 Speaker 05 Diana, worked as a designer and in sales in a kitchen and bathroom studio, always let them know you can get several quotes and ask for a discount. Always they'll, and if you can show you've got the lowest price for similar, usually there's a discount available.
31:32 Martin Lewis? And then Tony, who works in a GP practice. If you're on HRT, make sure you sign up for the prepayment prescription form to save on monthly prescription charges. Quite right, couldn't support that anymore. There are many women missing out on that one and it is a big way to save.
31:50 Martin Lewis? Back now to the questions on lifetime ISAs and help to buy ISAs. You are getting technical this week.
31:57 Speaker 05 Helen, I know that I can only put in until I'm 50, but does that actually work when you get to that age? My birthday is partway through the financial year, so if I put any money into it within the new financial year but before my 50th birthday, will I still get the 25% handed by the government?
32:13 Martin Lewis? Another really good question, Helen. So yeah, it's up to age 50 that you still get the bonus on the lifetime ISA. I'll be absolutely honest, I haven't read the terms because no one has got to that age. The oldest you could be to have a lifetime ISA, it opened in April 2017. So you could be, you were, let's say it was someone who turned 40 on the 7th of April 2017. So no one is yet 50. You can't yet be 50 and have got to that point with a lifetime ISA. So I will do some digging and get back to you later in the programme of exactly whether it is simply that you can do it in the tax year that you turn 50, you're still able to get the bonus, or there's some form of hard cut off on your birthday by the month.
32:56 Martin Lewis? I would have thought it was in the tax year that you turn 50, but I will do some checking and let you know later in the show.
33:02 Martin Lewis? And by the magic of podcasting, I do have an answer now. So I did check it later and I'm recording this at the back end, but we're putting it in the middle of the podcast, you see? So look, the key is you can continue to put money in a lifetime ISA, which means you can continue to get the bonus on the money that you put in a lifetime ISA until the day before your 50th birthday. It is on your 50th birthday that it all cuts off and you can't put any more in. So it is absolutely on the day itself. So if you haven't maxed out your lifetime ISA and it's right for you and you're 49 years old and 364 days, 365 days on a leap year, then get your money in.
33:43 Speaker 05 Okay, Olivia, I have a full Help to Buy ISA and no longer funding it. When do I need to actually purchase a house by?
33:51 Martin Lewis? Right, so you will keep getting the bonus on the Help to Buy ISA until November 2029 and you can still use it until December 2030 because the Help to Buy ISA is supposed to be a dead product. That's the current plan. Now, what's interesting here is you heard me mention earlier that the lifetime ISA is, may well be replaced by a first-time buyer's only version of the ISA, which will be likely far more like the Help to Buy ISA but with a few less caveats, I hope. So we do, there is a chance that the sort of Help to Buy ISA will be reopened. I think it's unlikely in its exact form. But you need to purchase a house to get the bonus by the end of 2030 is the answer with the Help to Buy ISA because it's a dead product.
34:33 Martin Lewis? Just to be very clear, that's only the Help to Buy ISA, not the lifetime ISA. That's because it's a legacy product.
34:38 Speaker 05 Debbie says her son has a Help to Buy ISA. He knows it's got to be used by a certain date. The area that he's currently working in means he's unlikely to be able to use it anyway as houses are above 250K. What's his best option?
34:51 Martin Lewis? Well, in that case, if he's definitely going to be buying a house and not in the next year, I would open a lifetime ISA and transfer some of it across. If there's a chance he might be buying it with a Help to Buy ISA, I wouldn't take the rest of my money out of a Help to Buy ISA if he's got a lot in. Actually, I'm thinking about that. If you're moving it to, if you're moving it to a lifetime ISA, there's no point in keeping the Help to Buy ISA. But there is no harm in keeping it in a Help to Buy ISA because you can take your money out at any point and you don't have to be using it to buy a house. So I'll go back to my original answer. If he's looking to buy and either he's got a lifetime ISA already open even with not much money in, therefore he's getting past that, it's got to be open one year, or he's not going to be buying in the next year, then I would be moving money across to the lifetime ISA so that he can get the bonus on that because that can be used on a property
35:36 Martin Lewis? up to £450,000.
35:38 Speaker 05 If you get together with somebody who is also fully, fully sort of iced up in this sense, sort of, and a first-time buyer, can you pool it? Pool the money to buy a house worth double? Do the 450k?
35:54 Martin Lewis? No, no. That really, the 450,000 is a limit on the property size. Even if 12 of you have all got lifetime ISAs and you're all buying together, the property purchase has to be under 450,000 pounds. What you can do is you can each have a lifetime ISA and each get the bonus. You know, if you were buying in the ridiculous scenario of 12 of you were buying together, you could all have your free money on your lifetime ISA to be put towards it, but the property has to be under 450,000.
36:22 Speaker 05 Right, okay. And with that 450,000 threshold limit, whatever we want to call it, is that set in stone? Or could that in itself move?
36:31 Martin Lewis? Well, I've been lobbying and campaigning for it to move for about five years, Adrian. I've had meetings. Jeremy Hunt semi-promised me he was going to do it and then in his last budget said, no, I think I'm moving it because we need to do some consulting to my next budget, but then wasn't in power for the next budget. I've spoken to Rachel Reeves about it. She said she's looking at doing it. She has told me that when they do the consultation on the ISA replacement, they will look at whether they'll increase the 450,000 pounds because clearly it's ridiculously unfair to have that frozen. People got these products in 2017 thinking they were going to be able to use it. House prices have gone up, the threshold hasn't, some people have been priced out, and they're now having to pay a fine, a penalty to the state for having opened a product that the state wanted them to, to be a first-time buyer.
37:13 Martin Lewis? And they're going to be a first-time buyer, but they're priced out of the market. Not only do they not get their bonus, but they pay an effective penalty. So it's hideously unjust. But I don't know what's going to happen because I've been, I've had politicians look at me and effectively say, yes, we'll let that limit at some point, and they've not done it. So you simply have to work on the assumption for the moment that if you've got a lifetime ISA, the limit is 450,000 pounds and it's not going to change. I hope to be wrong, but I wouldn't be betting on being wrong.
37:40 Speaker 05 Gillian, I've got a help to buy ISA that's down to two and a half percent interest rate. Doubtful I'm going to buy in the next couple of years, but not out of the question. So ditch and put the money in a new ISA or wait and see?
37:51 Martin Lewis? Absolutely. In your case, wait and see. Right? You have... The interest rate's 2.5%, the best ISA on the market's 4%, but if you end up buying a home, you're going to get a 25% bonus on whatever money you've got in there. So the upside gain, if you were to buy a home, is 25%. The downside loss, if you weren't, is about 1.5% interest because that's the difference between the best paying normal cash ISA and your Help to Buy ISA. And because it's a Help to Buy ISA, there's no penalties for taking your money out if you choose to do so if you're not buying a house. So I think because the upside gain is so much more than the downside loss of not going to a better ISA, I would stick where you are. Your decision then.
38:31 Speaker 05 Okay. Heather, son turned 18 a couple of weeks ago, has opened a ISA with £4,000, was offered cash or stocks and shares option when created the account, opted for stocks and shares, has no intention of buying a house in the next six years. We can see he can switch to cash if that is the better option, but ensure which is best.
38:50 Martin Lewis? So my general rule is, if you're looking to put money away for more than five years that you don't need and you won't want to access, then investing will, as long as it's in a nice broad spread of investments, and there are no guarantees because it's investing, investing will outperform savings. Now, normally, as a first time buyer, I would always suggest you use a cash ISA, a savings ISA, because you're probably looking to buy within the next year or two or three, and you need the money when you need the money because you're going to buy a house. So, but in your question, you're saying no intention of buying within the next six years. So if that is absolutely right, then hopefully a stocks and shares ISA will outperform. And once you start to get into the period when you might start thinking about buying,
39:35 Martin Lewis? that's the point where you might want to gradually start moving that asset back from a shares ISA into a cash ISA. What you don't want to do is, you know, let's picture ourselves in six years' time. We're in six years' time, suddenly your son goes, I need to buy a house now, but the market investment, because markets are volatile, they go up and down, is low at that point, so he's having to crystallise a loss. So you'd want to move it out a little bit before so that you can time when you take your money out, rather than just having to be at the mercy of, I need the money now, I've got to take it out, stocks and shares now. But generally, what you're doing doesn't sound wrong, there's no rights or wrong here, we don't have a crystal ball, but it doesn't sound wrong because you're not going to need the money in the next six years.
40:16 Speaker 05 Okay, three quick ones to finish. Thomas, I own a property, can I have a lifetime stocks and shares ISA for retirement, or do you need to have used one to buy a house first?
40:26 Martin Lewis? No, you can use it absolutely. If you've owned a property, you won't be able to get the first time buyer's bonus, but you can use it towards retirement savings, yes.
40:33 Speaker 05 Helen.
40:34 Martin Lewis? Or age sixty savings.
40:34 Speaker 05 Okay. Helen, please, are there any sensible options for moving money out of a ISA, well, saving for retirement and into a pension or similar, as the ISA counts as a save, as savings if on universal credit on forty five?
40:48 Martin Lewis? That is one of the big problems in the, in the lifetime ISA evidence committee that happened last year, and I was one of those who gave evidence to that committee at the Commons. One of the big problems with a lifetime ISA is it does count as savings, which means it can diminish your universal credit entitlement, whereas money saved in a pension doesn't. As a general rule, by the way, I would always say the first port of call, especially for any employee, is use your employee's pension scheme to save for retirement, because you have a matching contribution from them and you're getting it, money put in from pre-tax income. Where a ISA comes in, it tends to, for somebody who is self-employed, so they don't have an employer contribution and a basic rate taxpayer, then a ISA versus pensions is an interesting debate. If you're a higher rate taxpayer,
41:32 Martin Lewis? you're getting forty percent relief when you're putting money into a pension, so that's probably going to win. This, by the way, is one of the reasons it's tough to find a lifetime ISA. It's all, it's providers like Moneybox, who's the top pick at the moment, because many of the main high street banks won't do it because they're worried that they will get done for mis-selling because people would be better off putting money in a pension rather than retirement savings. But you're asking me, can you get money out of your ISA? That's the problem. Unless you're buying a house or you leave it till age sixty, no. So you will have to take the decision, are you better to take the money out and pay that six point two five percent penalty and then put that money into a pension, and you will get tax relief on putting it in a pension. You'll have to check out then, you can use the Money and Pension Service, Money Helpers website, in order to ask them the question
42:14 Martin Lewis? about that, because it needs to be, some specific decisions need to be made for you on, on your tax status on that. There's no easy way to not pay that penalty, though, I'm so sorry, Helen.
42:23 Speaker 05 Rob says, I've been pushing my eighteen-year-old daughter to open a ISA, however, if she does and then inherits my property on my passing, would she still be eligible for the government bonus?
42:34 Martin Lewis? No.
42:36 Martin Lewis? The rule is simple, you must have never owned or part owned a property anywhere in the world. So if she inherited a part share in your property, unfortunately she would no longer be entitled to the lifetime ISA bonus. What a rather depressing place to leave lifetime ISAs, Adrian.
42:53 Speaker 05 Yes, well, yes, but it's been, it's been, it's been bracing.
42:57 Martin Lewis? Thank you.
42:58 Speaker 05 High fibre, yet bracing. I've enjoyed it.
43:01 Martin Lewis? Right, Adrian, you know what time it is now. Let's hear it. Hello and welcome to Money Mastermind. Adrian, the score stands at you've got 17 right and 35 wrong in this three option multiple choice quiz, which means that you're sadly
43:24 Speaker 06 N, B, R, C.
43:29 Martin Lewis? No better than random chance. Last week I thought you were going to do it, you changed your mind at the last moment.
43:33 Speaker 05 I'm trying to put that behind me.
43:34 Martin Lewis? I have to tell you, I've had quite a few messages about that. People going, I don't get it, I don't get why you did that. But we're moving on, you're going to resurrect yourself, I've got faith in you. Here we go. Now listeners, our Adrian has come into a bit of money and immediately his inner visual monologue turned generation game. Convertible, hot tub, big telly, maybe one of those fridges with ice in the door, VR goggles with West Brom on repeat. But soon, this perfect middle aged fantasy turns into middle aged mundanity. Reality kicks in and sensibly, our Adrian thinks, I probably should just put a bit more money in my pension.
44:18 Martin Lewis? So today's question, Adrian, you're paying directly into a simple private stakeholder pension, not a workplace pension. If you're a 40% higher rate taxpayer, which of these is the situation? A, you get no tax relief automatically, you must claim all of it yourself. B, the pension provider usually adds basic 20% tax relief automatically, which means in practice you get 25% added on top on what you put in. C, the pension provider checks your tax band, by law, it has to do that, and automatically adds full 40% higher rate relief.
45:00 Martin Lewis? So you, in practice, get 66% more than you put in. So there you go, you're putting to a stakeholder pension, not a workplace pension. Is the no tax relief automatically basic 20% tax relief? Or do you get, does it have to assure your tax status and you get the 40%?
45:17 Speaker 05 I think, I think it's probably C. I just think it's, it's too big to be left in a grey area with, with having to, having to declare it yourself, or at least part of it yourself. So I think it's somewhere, I don't know, I'm talking myself out a bit. Well, let's go with C.
45:37 Martin Lewis? So you're going with C, your, your view is that they have to check your tax band and then you're going to get the money added on top. Is that your final answer?
45:45 Speaker 05 That's my final answer.
45:46 Martin Lewis? Lock it in.
45:50 Martin Lewis? So Adrian, the first thing I can tell you is there is tax relief added on top on a standard pension when you put it in. The real question, is it at 20% or is it at 40%? Well, the answer is B.
46:03 Speaker 05 Oh, not again.
46:05 Martin Lewis? So the pension provider will usually add basic 20% tax relief. So you get 25% more than you put in. This is called relief at source. So you pay in from taxed income, the pension provider claims basic relief from HMRC. So if you put 80 quid in, it will add 20 pounds on top. So you have a hundred pounds going in. As you're a higher rate taxpayer, you're likely entitled to more, but you don't get that put in your pension. You normally claim the extra relief through self-assessment, or if you're not doing a tax self-assessment, you ask HMRC to adjust your tax code. Now, you can usually get this tax relief on personal contributions up to 100% of your earnings capped by the annual allowance, which is a maximum normally of £60,000.
46:49 Martin Lewis? Though high earners and people of access to pension can have lower limits. Now, what's interesting about this, we've been talking about ISAs before. Well, there is a savings allowance for children, not often talked about, but because you get relief at source, anyone can get relief at source, you could actually put £2,880 into a pension for a child. They would get tax relief even if they're not a taxpayer, which means they would have £3,600 in, which is the maximum you're allowed to get if you don't have any earnings. And therefore, they would get 20% tax relief on pension for a child, which is actually a very effective way, if you've used up all the other allowances, you've got lots of money, to save for your kid in the long run. Just as a little nerdy thing there, but Adrian, you got it wrong.
47:28 Speaker 05 I'm terribly sorry.
47:30 Martin Lewis? Yeah, I thought you would know that, though. I actually thought you'd get that. Because the problem is, of course-
47:34 Speaker 05 Well, I thought it was too, I always think, well, you say the obvious one seems B, and then I think it's a trick. I spend more, I'm more, I spend more time trying to think what you're thinking, rather than, and what you're planning, and what skulduggery you're up to, than actually thinking about what is the right answer.
47:50 Martin Lewis? But what's interesting is you haven't yet got 2026 Mastermind, right? You will notice, I made a decision at the beginning of the year that I wanted you to get more right. I have literally been saying this to you every time, but I hope we're going to change that, instead of making fun of you about it. That's my 2026 resolution.
48:11 Speaker 05 Okay, it's not going very well, is it? I'm not playing my, I'm not playing my-
48:14 Martin Lewis? I'm genuinely not trying to catch you out. I mean, the questions have tricks in them, because that's about making you think about what the finance is behind it. But I'm not actually trying to make you get them wrong. You always assume I am, and it makes you get them wrong. So, I'm now officially putting you on notice. I'm trying to help.
48:31 Speaker 05 Okay, all right, I, I appreciate it.
48:34 Martin Lewis? Within the rules of the game.
48:35 Speaker 05 Okay, that's great. Okay.
48:37 Martin Lewis? Thanks, mate.
48:38 Speaker 05 That's, that's a good as of a time as any to end. I will, I'll look, if you, I wish you'd told me on January the 1st, I would have enjoyed 2026 a lot more.
48:46 Martin Lewis? I did, I did, I did say it, I did say it.
48:48 Speaker 05 Okay, well, I didn't believe it. I thought it was another trick. But now, now I know, for sure.
48:52 Martin Lewis? Okay.
48:53 Speaker 05 Cheers, Martin.
48:57 Martin Lewis? Now time for the best buy lifetime ISAs and help to buy ISAs. We'll start with lifetime ISAs, these are the cash ones. The top pair is currently Moneybox at 4.6%, but that includes a 1.8% fixed bonus for a year. So after that, the rate will drop. You've got Tembo at 4.5%, Plum at 4.05%. All of these are variable rates, so you need to keep an eye on them, but all do allow you to transfer in an existing lifetime ISA. To do that, you just apply for one of these ISAs and fill in the transfer bit in the form. Do not take your money out because you'd pay the withdrawal penalty. If you're looking for stocks and shares ISAs, well, the DIY ones, where you can choose totally your own investments are the like of AJ Bell and Hargreaves Lansdown and Doddle. If you want
49:39 Martin Lewis? simpler platforms, then the like of JP Morgan Personal Investing and Moneybox can help you too. When we get on to help to buy ISAs, while they're closed to new applicants, you can still open a new one to transfer from. The best paying help to buy ISA currently is HSBC at 2.75%. I should note, your existing help to buy ISA may pay more because one I've just listed is only for transfers, but there are a few help to buy ISAs that pay a little bit more than that. So check what your rate is before you're considering transferring it.
50:12 Martin Lewis? That's it for this week. We tend to put out a new episode every Thursday and Monday, and that's our Question Time podcast, where you can ask me absolutely anything and everything (open brackets) within recent close brackets. If you've enjoyed today's podcast, please tell your friends you've been listening to the Martin Lewis podcast, and why don't you and they subscribe? Hey, and leave us a review too. Then your pockets will be pleased for you. And if you haven't enjoyed it and you didn't like it, well, just keep quiet, okay? Keep it to yourself. You don't need to tell anyone. It's between me and you. Shh. Bye bye.
50:59 Speaker 07 But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinnewispodcast at bbc.co.uk. 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.
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