Martin Lewis explains how to get free £1,000 every year with one savings account

24 January 2023 , 21:15

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Martin Lewis explained how LISA accounts work (Image: ITV)

Martin Lewis has explained how to get up to £1,000 free each year from the Government by using a specific savings account.

You get a 25% bonus on your savings when you put your money into a Lifetime ISA (LISA) account.

The maximum amount you can put into a LISA is £4,000 each tax year - meaning a yearly bonus of up to £1,000.

If you save less than this, you'll still get the 25% bonus on what you've saved - for example, save £2,000 and you'll get £500 free.

But the catch is, you need to use any money put into a LISA on either your first property or your retirement.

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If you withdraw the cash for any other reason, you’ll pay a penalty of 25%.

Savings accounts are on the rise (Getty Images/Image Source)

You can open a LISA if you’re aged between 18 to 39 although you can keep saving into an existing account until your 50th birthday.

The maximum bonus you can pocket from the Government is £33,000 if you open your LISA at the age of 18, and max it out until you hit 50.

This is unless you're born on April 6, in which case the biggest bonus is £32,000.

“The state will give you a 25% boost on the money you put in," explained Martin during his Martin Lewis Money Show Live on ITV this evening.

“You can put in up to £4,000 a year so that’s up to £1,000 a year bonus from the state.”

But the MoneySavingExpert issued a few words of warning about these savings accounts.

If you’re opening a LISA with the intention of saving for your first home, you’ll need to have the account for at least one year before you get any bonus.

You also need to keep in mind that the total property value you can buy with the help of a LISA must not exceed £450,000.

“Do be careful if you think the house you could buy could be above a £450,000 maximum LISA house,” urged Martin.

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The MoneySavingExpert team this week wrote to Chancellor Jeremy Hunt to call on the LISA penalty to be removed, or the property value threshold to be increased.

“The LISA £450,000 [limit] hasn’t gone up since 2017. They should either wipe the penalty for people buying bigger [homes] or put that £450,000 up," he said.

“Not the subject for today but I hope to hear back from the Chancellor on that because I don’t think it’s that fair.”

Levi Winchester