Martin Lewis urges people to put 'at least £1' in new bank account now

Martin Lewis has issued a warning over the Lifetime ISA - and urged people to put £1 in the account now. The BBC Sounds star has circulated a clip from his ITV show, which describes how the Lifetime ISA works and how people can benefit.

Mr Lewis said: "First-Time Buyers can get up to £1,000/yr free in a Lifetime ISA. Here’s my video briefing on how it works and why you should put at least £1 in one." The 52-year-old encouraged parents to get their children who are aged over 18 to invest money into a Lifetime ISA (or LISA).

A LISA lets you save up to £4,000 every tax year towards a first home or your retirement, with the state adding a 25% bonus on top of what you save. Therefore, if you put £4,000 in each year, you will get an extra £1,000 on top each time.

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Mr Lewis shared that there is a withdrawal fee at a rate of 25% if the money invested into a LISA is withdrawn and not used t buy a person's first property. Additionally, the maximum property price that someone can buy using the LISA is £450,000.

The MoneySavingExpert website states: "Plus you earn interest on whatever you save, and as it's an ISA (Individual Savings Account), that interest is tax-free." The MSE website adds: "You need to have held a LISA for at least 12 months to be able to use it (and the bonus) towards your first home WITHOUT paying a penalty – use it before and you'll pay a withdrawal charge, which wipes out the bonus and a bit more on top."

Mr Lewis said: "If you'll DEFINITELY buy a home for less than the LISA maximum of £450,000, are aged 18 to 39, and you WON'T do it within a year of opening, and can max out the savings, go for a LISA as you will get a bigger bonus. Yet if you're BUYING QUICKLY, you're 40 or over, or you're not 100% sure you'll buy at all, then it's safer to stick with your H2B ISA."