Key changes to savings rules are coming in very soon
Martin Lewis has issued a warning about the rules around savings accounts. The consumer champion shared his thoughts after a member of the public told him they had been refused a service by their account provider.
The saver reached out to Mr Lewis via social media after he spoke 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 designed to help people save towards purchasing their first home or as a nest egg for later life. Funds can be withdrawn either to put towards a first property purchase or once the account holder reaches 60, with a penalty applied for any other withdrawals.
Savers can contribute up to £4,000 each tax year and receive a 25 percent Government bonus on all deposits, potentially earning an additional £1,000 each tax year However, the person said that in their case they had attempted to transfer their LISA funds and had been unsuccessful.
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 received from their LISA provider, after they had requested to transfer some funds from their previous account over to 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 told the saver: ” 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 note 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.
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 allowance.
