Brits urged to claim £1000 free cash if they have this savings account, find out if you're eligible

First-time buyers could be missing out on a £1,000 cash boost if they haven’t topped up their Lifetime ISAs (LISAs) by the end of the tax year. April 5 is the deadline for any tax-free bonus you will receive on your savings and so if you haven’t put in £4,000 by then you will miss out on the help from the government.

Money Saving Expert, Martin Lewis, recently urged people to top up their savings as soon as possible as businesses will need time to process the payments and the deadline is quickly approaching.

How do Lifetime ISAs work?

LISAs are designed to help first-time buyers save money for a deposit on a new home or save for later life. Account holders can put in up to £4,000 a year and get a free 25% bonus on their savings of up to £1,000 from the government.

You must make your first payment into your LISA before you are 40 and you can contribute every year until you are 50. After that your account will stay open and your savings will still earn interest or investment returns.

The Lifetime ISA limit of £4,000 counts towards your annual ISA limit, which is £20,000 for the 2022 to 2023 tax year.

You can withdraw money from your ISA if you’re:

• buying your first home
• aged 60 or over
• terminally ill, with less than 12 months to live

If you need to withdraw for any other reason there is a 25% charge which will cancel out the government’s bonus.

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First time buyers

One first time buyer was delighted with her LISA, as per The Sun:

I opened a LISA when they were relatively new in 2017 (after hearing through Martin).

I managed to pay in the maximum for six years and bought my first home in 2022. So £6,000 free money!

If you want to use your savings to help buy your first home then the following criteria will apply, as per gov.uk:

• the property costs £450,000 or less
• you buy the property at least 12 months after you make your first payment into the Lifetime ISA
• you use a conveyancer or solicitor to act for you in the purchase - the ISA provider will pay the funds directly to them
• you’re buying with a mortgage

If the person you’re buying with has a Lifetime ISA, they can use their savings and government bonus too.

If you have already opened a Help to Buy account, you can transfer the money to a Lifetime ISA. If you transfer money from a Lifetime ISA to a Help to Buy ISA you’ll have to pay the 25% withdrawal charge.

LISAs are offered by a range of banks and online providers and in the UK they are all backed by The Financial Services Compensation Scheme (FSCS).

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Sources used:

- The Sun 'Martin Lewis issues two-week warning as first-time buyers could miss out on £1,000 free cash'

- Gov.uk 'Lifetime ISA'

- Money Saving Expert 'Top Lifetime ISAs (LISAs)'