Martin Lewis Urges Savers to Put £1 in ISA Before Major Reform

The UK government’s proposed replacement for the Lifetime ISA (LISA) will target first-time buyers with a new savings scheme, according to multiple reports. Financial expert Martin Lewis has urged savers to deposit £1 immediately to secure benefits before reforms take effect, while Treasury officials outline plans for a “first-time buyer ISA” to stimulate the housing market.

The Treasury is developing a new ISA designed specifically for first-time buyers, replacing the existing Lifetime ISA, which currently offers a government bonus on savings up to £4,000 annually. According to Money Saving Expert, the new scheme is expected to “kickstart” the property market by making homeownership more accessible for younger buyers. The Financial Times reports that the reform is part of a broader overhaul of savings incentives, with details still under review.

Why is the government replacing the Lifetime ISA?
The current LISA structure has faced criticism for being overly complex and less effective than intended. A 2025 Treasury review found that only a small number of accounts had been opened since its 2017 launch, with many savers unaware of the withdrawal penalties for non-home purchases. The new ISA will likely eliminate these restrictions, focusing solely on first-time buyers—a shift that aligns with the Treasury’s stated goal of boosting housing supply.

How will the new ISA work?
While exact terms remain unconfirmed, sources suggest the replacement will:

• Remove penalties for withdrawing funds before age 60 (a key complaint under the LISA).
• Target first-time buyers exclusively, with potential links to mortgage affordability programs.
• Retain a government bonus, though the Financial Times reports the Treasury is considering reducing the match to fund broader housing initiatives.

Martin Lewis, whose Money Saving Expert platform has millions of monthly readers, warned in a June 26 update that savers should act “now” to avoid missing out on transitional benefits. “The window to top up your LISA before the rules change is closing fast,” he stated, citing reports that the old scheme could close by late 2026.

What happens next?
The Treasury has not set a formal launch date for the new ISA, but Yahoo Finance UK reports officials aim to finalize details by autumn 2026. A spokesperson for the Department for Levelling Up, Housing and Communities confirmed to The Negotiator that consultations with mortgage lenders are underway, though no timeline for implementation has been provided.

Key questions remain unanswered:

• Will the bonus rate drop? The FT suggests a lower match is under consideration, but no official figures have been released.
• How will eligibility be verified? Current LISA rules require proof of first-time buyer status; the new scheme may tighten these checks.
• What happens to existing LISA balances? Sources indicate transitional protections may apply, but details are scant.

For now, savers with active LISAs are advised to monitor official Treasury updates. Lewis’s call to deposit £1 “now” reflects urgency, though the exact trigger for reform remains unclear. The government has not responded to requests for comment on timing or bonus rates.