MoneySavingExpert Martin Lewis has reminded savers that in order to benefit from your tax-free allowance, you must put money into an ISA before April 6th, the new tax year
An ISA cash account is a savings product where you pay no tax up to a limit of £20,000 for the 2021/22 tax year.
if you have one Lifetime ISAyou can save £4,000 every year and the government gives you a 25% bonus on top of the money you save.
That means you can get £1,000 free every tax year – or £2,000 free if there are two of you and both have a LISA account, which you can max out.
But time is running out to make the most of your LISA-free money as the current tax year ends on April 5th.
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This means that in order to receive bonus payments from the government, you must transfer money before April 6th, the new tax year.
“If you’re a first-time buyer, check out Lifetime ISA’s 25% boost worth up to £1,000/year for your first home,” Martin said in MoneySavingExpert’s latest email.
Remember that the amount you pay into a LISA counts towards your total annual ISA allowance of £20,000.
But when you’re saving for your first home, you won’t find a regular savings account from a bank or lender that pays 25% interest.
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You can open a LISA account between the ages of 18 and 39. You can use this to make a deposit for your first apartment or for retirement provision.
If you withdraw your money for reasons other than these, you will lose your bonus and pay a 25% penalty, which is around a 6% loss.
Regarding the ISA rates for cash, Martin made a somber statement that 85% of people are now better off dropping them.
This is because cash ISAs currently generally have worse interest rates than regular savings accounts.
Instead of stashing your money in an ISA, you should focus on an account with the highest interest rates, he said.
“Now, the personal savings allowance means that most interest on savings does NOT pay taxes,” Martin explained.
“The PPE launched in 2016, allowing base taxpayers (20%) to earn £1,000/year in savings interest tax free and senior taxpayers (40%) £500.
“At today’s easily accessible top interest rate of 1%, you would need to save a hundred grand to generate £1,000 in interest. Today, most people — over 19 out of 20, in fact — no longer pay taxes on savings.”
The best easy access account right now is Virgin Money, which pays 1% interest on up to £25,000. If you have a smaller sum, it pays 2.02% on £1,000.
The second largest payer is Atom Bank, which pays 0.9%.
If you can afford to lock away your money for a full year, Shawbrook Bank is the top player, paying 1.6% – but you must deposit at least £1,000.
JN Bank offers you 1.96% on their two-year fixed account if you deposit at least £1,000, or the best five-year fix is Monument at 2.4%.
In comparison, the best accessible cash ISA is Paragon and pays 0.8%, while OakNorth Bank’s 1-year fixed cash ISA offers 1.28% interest and a 2-year UBL UK pays 1.6%.
https://www.mirror.co.uk/money/martin-lewis-warns-savers-only-26541051 Martin Lewis warns you only have DAYS left to get £1,000 free from Government