Martin Lewis warns there’s just DAYS left to get free £1,000 from government
MARTIN Lewis has warned that there's just DAYS left to get a free £1,000 boost from the government.
He's urged any savers to transfer their money over into an ISA before the new tax year if they want to benefit from the tax-free allowances that come with it.
You should "use it or lose it" Martin explained in his latest installment of the weekly .
And it's all because the current tax year is quickly coming to a close.
The new tax year begins on April 6, which is now just days away.
But if you haven't already, making use of the tax free allowances on cash ISAs before they're lost altogether for another year, means you won't miss out.
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A cash ISA account is a savings product where you don’t pay tax up to a limit of £20,000.
But if you have a Lifetime ISA, you can save up to £4,000 each tax year and the government will then add a 25% bonus, effectively giving you free money.
And that can tot up to as much as £1,000 extra.
So if you save £1,000 a year, the government will add in £250, and if you save the full £4,000 you'll get an extra £1,000 on top.
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And you can get that £1,000 free each tax year - or £2,000 free if you’re in a couple and you both have a LISA account that you max out.
But that max £1,000 disappears with the end of the tax year, so Martin urged savers to act now if they really want to cash in - then when the new year begins you can start saving up for the next boost.
The warning only made up a small part of Martin's advice in the newsletter his week, but it was one not to miss if you want to redeem the extra spends.
The bonus is paid every year you save something in to your LISA, until you hit the age of 50.
You can put anything from £1, to the maximum amount into the account and get 25% of that added after 12 months.
It does take one year of having the account open though before you'll see the bonus start to appear.
Then, the bonus is paid monthly - if you've put money in that month - and takes between four and nine weeks to arrive.
But keep in mind that however much you put away into a LISA will count towards your overall yearly £20,000 ISA allowance too.
You can also only open a LISA if you are aged between 18 and 39.
If you did open it at 18 though you could get up to £33,000 in total from the bonus, by maxing it out until you hit 50.
Aand Martin explained that the £1,000 boost is particularly helpful for first time buyers.
That's because the LISA savings can be used to put a deposit toward your first home as well as for retirement.
If you take out your money for anything other than those two instances though, you’ll lose your bonus and pay a 25% penalty.
It's important then to only put in money that you can afford to stash away - and you shouldn't transfer money you don't have to spare into the savings account just because of the incentive.
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And like with other forms of ISAs the LISA comes in two forms, cash LISAs and stocks and shares LISAs.
But you'll have to keep in mind which you'd rather take out as stocks and shares can be risky and your invested money could go up or down, while a cash LISA will only keep what you put into it.
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