Martin Lewis ‘more restrictive’ warning over savings accounts rules | Personal Finance | Finance
Martin Lewis has issued a warning about the rules that apply to savings accounts. The consumer expert shared some thoughts after a person told Mr Lewis they had been denied a service by their account provider.
The saver contacted Mr Lewis over social media after Mr Lewis had spoken about ISAs on his BBC podcast. The person asked: “You suggested on your podcast that for the new tax year, we could put £20,000 of new money into our ISA, whilst also transferring £4,000 from last year’s ISA to our LISA for the new tax year.”
The LISA (Lifetime ISA) is a savings product to save up towards buying your first home or as a later life savings pot. You can withdraw the funds either to use it towards your first home purchase or once you turn 60, otherwise there is a penalty to pay.
Savers can pay in up to £4,000 each tax year and you get a 25 percent Government bonus on any deposits, potentially netting you an extra £1,000 each tax year.
But the person said they had tried to transfer their LISA funds and had not been able to. They told Mr Lewis: “I have tried and been denied with the following response, and are keen to get your thoughts.”
They shared a screengrab of a message they had received from their LISA provider, after they had requested to transfer some funds from their previous account into an account with them. The message stated that as per their previous provider’s rules, “you cannot partially transfer current tax-year ISA subscriptions into a Lifetime ISA”.
Responding to the question, Mr Lewis issued an important word of warning. He said: “The question [on the podcast] was about the ISA rules, but individual providers can have terms and conditions which are more restrictive unfortunately.”
Changes to ISA rules
ISA savers should not some key changes to ISA allowances coming up very soon. From the April 2027 tax year, the cash ISA allowance will effectively be cut. The current rules allow you to deposit up to £20,000 a year into ISAs, and you can use this allowance as you decide divided between cash accounts and stocks and shares ISAs.
But from the coming tax year, you will only be able to use up to £12,000 as you decide, while the other £8,000 will have to be used for stocks and shares ISAs.
People aged 65 and over will not be affected by the changes and will retain the current allowances.
