Politics

Martin Lewis reminds savers to claim £1,000 from government as deadline is tomorrow



Martin Lewis has issued a reminder in order that as many individuals as potential reap the benefits of an additional £1,000 from the federal government – with the deadline being tomorrow, April 5.

He warned that the reduce off date was looming with simply at some point left to assert. The cash mogul urged savers to “use or lose” their ISA allowances earlier than the tip of the present tax yr, earlier than April 5.

If in case you have a Lifetime ISA, you’ll be able to put away £4,000 annually and the federal government will provide you with a 25% bonus on high of the money you save. A money ISA account is a financial savings product the place you don’t pay tax, as much as a restrict of £20,000 for the 2021/22 tax yr, as reported in March.

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This implies you may get £1,000 free every tax yr – or £2,000 free in case you’re in a pair and also you each have a LISA account that you just max out. However time is operating out to benefit from your LISA free cash, as the present tax yr ends on April 5. This implies it’s worthwhile to switch any cash over earlier than April 6, the brand new tax yr, to get any bonus cost from the federal government.

Within the newest MoneySavingExpert electronic mail, Martin stated: “In the event you’re a first-time purchaser, take a look at the Lifetime ISA’s 25% enhance price as much as £1,000/yr in your first dwelling.” He reminded to keep in mind that however much you put away in a LISA will count towards your overall yearly £20,000 ISA allowance. But if you’re saving for your first home, you won’t find a regular savings account from a bank or lender that pays 25% interest.

You can open a LISA account if you’re aged between 18 and 39. It can be used to put a deposit toward your first home or for retirement. If you take out your money for anything other than these reasons, you’ll lose your bonus and pay a 25% penalty, which works out at around a 6% loss.

When it comes to cash ISA rates, Martin issued a bleak statement that 85% of people are now better off ditching them. This is because cash ISAs generally have worse rates than normal savings accounts right now.

Instead of stashing your money into an ISA, you should be focusing on an account with the highest interest, he said. Martin explained: “Now the personal savings allowance means most DON’T pay tax on savings interest.

“The PSA launched in 2016, allowing basic (20%) taxpayers to earn £1,000/year of any savings interest tax-free and higher (40%) taxpayers £500. At today’s top easy-access 1% rate, you’d need a hundred grand saved to generate £1,000 interest. So these days, most people – over 19 in 20 in fact – don’t pay tax on savings anymore.”

The top easy-access account right now is from Virgin Money, which pays 1% interest on up to £25,000. If you’ve a smaller sum, it’ll pay 2.02% on £1,000. The second top payer is Atom Bank which pays 0.9%.

If you can afford to lock your money away for a whole year, Shawbrook Bank is the top player paying 1.6% – but you have to put in at least £1,000. JN Bank will offer you 1.96% with its two-year fixed account if you pay in a minimum of £1,000, or the best five-year fix is from Monument with 2.4%.

In comparison, the best easy-access cash ISA is from Paragon and pays 0.8%. While the one-year fixed cash ISA from OakNorth Bank offers 1.28% interest and a two-year from UBL UK pays 1.6%

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