Martin Lewis Urges Young Adults To Open Lifetime ISA Now

Martin Lewis, the renowned financial expert and host of the BBC’s Money Saving Expert podcast, has sounded an urgent call to action for millions of young adults in the UK. Speaking on January 30, 2026, Lewis urged anyone aged between 18 and 39—those born between 1986 and 2008—to open a Lifetime ISA (LISA) and deposit just £1, warning that failing to do so now could mean missing out on thousands of pounds in government bonuses.

The reason for this advice? Major changes are coming to savings products for first-time buyers. Chancellor Rachel Reeves, in her Autumn Budget of November 2025, announced sweeping reforms to the nation’s savings landscape, including the replacement of the Lifetime ISA with a new, simpler product aimed exclusively at helping first-time buyers get onto the property ladder. Consultations on the new scheme are set for 2026, with a likely rollout in April 2028, according to the BBC and other major outlets.

So, what’s at stake—and why the rush? The current Lifetime ISA allows people aged 18 to 39 to open an account and contribute up to £4,000 a year until they turn 50. The government then adds a generous 25% bonus, up to a maximum of £1,000 each year. But there’s a crucial catch: to qualify for the bonus when buying your first home, the account must have been open for at least a year. "If your age is between 18 and 40 and you do not have a Lifetime ISA or a Help to Buy ISA, I would suggest you open one and put a pound in now," Lewis said on his podcast, as quoted by the BBC. "That’s because the government has announced the Lifetime ISA is to be replaced by a new first-time buyer’s savings product."

This advice, Lewis explained, is not just about maximizing government generosity—it’s about protecting future options. "With the Lifetime ISA, in order to use it to get the 25% bonus...as a first-time buyer on a property under £450,000, you have to have had it open for a year. So getting a pound in means it’s open and then you have the facility available if you need it. So if in a year’s time you suddenly were in a position you could buy a house, you could dunk £4,000 in the Lifetime ISA and get the £1,000 bonus and use it then, because it’s been open a year."

Lewis’s advice is rooted in the uncertainties surrounding the government’s new savings product. HMRC has confirmed that the replacement will be available only for first-time home purchases, and unlike the current LISA, it will not offer the option to use savings for retirement after age 60. "We don’t know exactly what it is; my guess is it will open in April 2028. It will be a relatively simple product where you save in it and you get a bonus, and unlike the Lifetime ISA, you won’t be able to use it to save for your older age savings once you’re aged over 60," Lewis noted, as cited by the BBC and Everything Money.

But the clock is ticking. In order to take advantage of the current LISA’s flexibility, the account must be opened and funded—however minimally—before your 40th birthday. Even a token £1 deposit is enough to start the all-important one-year clock. Lewis emphasized, "The Lifetime ISA can only be used as a bonus for first time buyers if it has been open for a year. So if you are able to have a Lifetime ISA and you are a first time buyer, which means someone who has never bought or owned a property anywhere in the world before, then my suggestion is you put a £1 in, so that you get the clock ticking, so that if in a year’s time you did want to buy a house for the first time, then you could instantly put £4,000 in, you’d get a £1,000 bonus and that could be used for your deposit."

Critics have long pointed to the LISA’s limitations, particularly the £450,000 property price cap, which can be restrictive in high-cost areas like London. As reported by the BBC and other sources, many first-time buyers in the capital and other major cities find themselves priced out of using their LISA savings as intended. The new product’s details remain under wraps, but there is hope that such issues will be addressed in the upcoming reforms.

Another sticking point is the harsh withdrawal penalty. If you withdraw funds from your LISA for anything other than buying your first home, reaching age 60, or being terminally ill, you face a 25% penalty on the total amount—including the government bonus. This means that even your original deposit is penalized, resulting in an effective loss of 6.25% if you only ever deposited £1. Lewis explained on his podcast, "I should note the risk, the risk of the £1 for everyone is that you decide it’s not going to work for you and you want to take it out, you’re going to pay a 6 percent penalty, so there’s a 6 pence risk here, and you need to be aware of that."

Despite this minor risk, Lewis sees significant upside in opening a LISA now. Not only does it preserve the option to access the 25% bonus for first-time home purchase, but it also keeps open the possibility—however uncertain—of using the LISA for retirement savings if the rules remain favorable. "The Lifetime ISA offers you the ability to save towards when you’re 60, we’ll call it retirement-type savings, older age savings, that you don’t get elsewhere, you get this 25 percent boost on it. Generally, a pension is a better product, especially an employee pension, where the company will match pension contributions with you, than the Lifetime ISA, for most people. But the LISA is an interesting second facility," Lewis said, as reported by Everything Money.

The government’s reforms don’t stop at the LISA. Chancellor Reeves also announced a reduction in the annual Cash ISA allowance for those under 65—from £20,000 to £12,000 starting April 2027—in an effort to encourage more investment. Stocks and shares ISA limits, however, remain unchanged. Currently, money put into a LISA counts toward the overall £20,000 ISA limit.

So, what’s the bottom line for young savers? According to Lewis, "For the sake of a quid, putting a quid in to give yourself the facility of having a Lifetime ISA to save for your retirement if it becomes worthwhile in future is a good idea. Now, I don’t even know if you will still be able to use it to save for retirement once they introduce a new product, but it’s possible you may be. So my point is, putting a quid in a savings product is not a particularly big cost to give you the facility in case you need it in the future—and if the worst comes to the worst, you’d be able to take the pound out for just a 6.25% penalty, so you’d lose 6p."

With the rules set to change and the future of flexible savings options uncertain, Lewis’s advice is clear: act now, even if it’s just with £1. The small step today could unlock thousands in benefits down the road—or at the very least, keep your financial options open as the savings landscape shifts beneath your feet.