The Martin Lewis Podcast
The huge new ISA and Lifetime ISA changes explained | Flight crew secrets
25 Jun 2026
Transcript generated automatically by AI and may contain errors.
Chapter 1: What are the recent changes to Lifetime ISAs and Help to Buy ISAs?
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We'll be right back. We'll be right back.
Here's your quick five lifetime ice and eath to nose. Do not pay an exit or other fees if you want an independent check first. I think they should have done it by carrot. They're doing it by stick. I think it's going to cause a lot of people to be pretty upset about it. Just get a quid in. Get it open. Hello, I'm Martin Lewis, and this is the cunningly named The Martin Lewis Podcast.
I do wonder what that's going to be about. Well, I don't wonder. We all know, really, don't we? Anyway... This is our Big Topic episode, where each week we lead on one main subject to help you save. Usually most of it comes from a BBC Radio 5 live show with Adrian Charles, but there's also bonus money-saving tips and tricks just for you lucky, lucky podcast listeners. Play the theme tune.
I've got bills I've got to pay So I'm going to work
Martin Lewis, how are you, sir?
I'm doing very well, thank you very much. But we have a busy programme for everyone today. There have been a raft of huge announcements to shake up the ISA individual savings account regime this week. And we're going to try and get through all of them. First of all, we all knew the cash ISA limit is being cut now. next year for those under 65.
But now lots of specific rules have come in about what cash you can keep in a shares ISA, when you can transfer, when you can't transfer. And quite a few people are up in arms about it. I'll be going through step by step exactly what it means for people. The bigger news this week, though, is it's been announced there is to be a new first time buyer ISA to replace the lifetime ISA.
My guess is it will be coming in next April. We've got the consultation document. I'll be talking you through the details of the new first-time buyer ISA, which quite interestingly is called the first-time buyer ISA. And what does this mean for those who already have money in lifetime ISAs and help to buy ISAs? Should you still continue to use them? What you should do? And a lot more.
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Chapter 2: How do the new Shares ISA rules affect savers and investors?
So I'll talk you through exactly how that works, how you should use it now, knowing that the first-time buyer ISA is coming in and the pros and cons of it. There's a lot to talk about. Let's do it. I think we should probably start with the changes to cash ISAs, which are the rules that are coming in. So what we already knew was that in April 2027, the cash ISA limit for those aged under 65
will drop from the current £20,000 to £12,000. The overall ISA limit will remain at £20,000. So it means you could put £12,000 in a cash ISA and the remaining £8,000 in a shares ISA. You could put it all in a shares ISA. You could put £5,000 in a cash ISA. As long as you haven't got more than £12,000 going into cash ISA, In that tax year, money already in doesn't count.
That doesn't matter. So if you've already got money in cash ISIS, the limit doesn't apply. It's only for new money going in a tax year. And that will start from April 2027. But there have been a lot of small changes coming in. And we have to understand that by first thinking. Why are they doing this?
Well, I've spoken to Rachel Reeves about this a few times, and she has said the reason is they want young people to invest. They want to encourage more investment rather than saving, saying it's good for the economy. It is. It's good for the individual. Investing over the long term in a broad range of shares is good for the individual. And so I agree with the reason.
Personally, I disagree with the method. I think they should have done it by carrot. They're doing it by stick. I think it's going to cause a lot of people to be pretty upset about it. I mean, to be honest, I was the one behind the carve out for the over 65s because I went in with the chancellor twice or as one of those people, I should say. But I think, you know, I remember the discussion.
It was pretty plain because she said we want younger people to invest. And I said, why on earth are you going to prevent over 65s who are trying to de-risk from putting more money in a cash ISA? And she said, OK, fair. And the 65s came from that. So. And some people don't like me for it. They say it's a generational divide.
Well, I don't like the whole policy, but we managed to get a carve out for some people. So let's go through what we've learned this week, because this is important. First of all, when you have money in a shares ISA, you can currently keep it in a cash part of the shares ISA, sort of like a savings equivalent and an interest.
That's set up so that you can hold your money you want to invest in there. But some people use it to keep money in for a longer period. They have now said that cash held in shares ISAs and also innovative finance ISAs will not be interest free. And this is age irrelevant. So this will happen for the over 65s too from next April. There will be a 22% tax on cash savings.
Also, just to be really technical, Sharia savings that don't pay interest, they pay an equivalent profit, will count in the same way. So there'll be a 22% tax on those too. Now, I just want to be really clear here, as I know this confuses some people. When we're talking about your savings being taxed in the UK, we're never talking about the savings themselves.
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Chapter 3: What common mistakes do holidaymakers make according to industry insiders?
Anyway, back to the pod. Now, my problem with this is actually one of the ways that beginners investors invest is they have cash in their account and they drip feed it in over a set period so they can try and ride out the ups and downs of the market. And this will disincentive that, which I'm slightly worried about. They're trying to do it to get people to invest.
And I think this may well actually have some disincentive effect too. Other new rules. Under 65s won't be able to transfer money from shares ISAs to cash ISAs. So again, you can't put your money in a shares ISA and then decide, oh, I'm now going to move it into a cash ISA, which you can do right now.
So from next April, that goes, though you will, of course, be able to move money from a cash ISA to a shares ISA. Money market funds, which are investment funds that are pretty cash-like, we thought they might have a tax charge on them too. They've decided not to do that, but they've said you can't have all of your money market funds, your whole shares, I said, be money market funds.
But they haven't put a minimum, so you could literally put a quid in a shares fund. fund and all the rest in a money market fund if you wanted to. I'm not sure why you would, but you could if you wanted to do that.
Chapter 4: What should you do if you're unhappy with a claims management firm for car finance?
Short-date gilts won't count as cash-like assets, which many were worried about. If you know what they are, you know what they are. If you don't, you're probably not interested in them at the moment. I'll talk more about that another day. And the final one on this, or getting in touch, you've got questions on it, We now know what age 65 means.
And I have been asked this so many times, I can now tell you. It is not that you will suddenly be allowed to put £20,000 into a cash ISA on your birthday. They're saying in the tax year you turn 65, you will be allowed to put £20,000 in and every year beyond that. So if you turn 65 on the 5th of April, the day before the new tax year,
you could actually put £20,000 in the day after your 64th birthday.
Right, got it. Shall we do some questions on all this? Gavin, does this affect cash ISAs or is it just cash held in stocks and shares ISAs?
So the new tax is only on cash held in stocks and shares ISAs. A cash ISA is by definition a savings account where the interest is never taxable. You will never pay tax on it and it doesn't count towards all your other tax allowances. So it doesn't count to the £1,000 personal savings allowance that a basic rate taxpayer can put money in tax-free. And that will continue.
A shares ISA will continue to be tax-free for capital gains, tax-free from income from bonds, tax-free on dividends. But you will now be taxed on cash or certain very similar to cash type things held in a shares ISA. From April 2027, it'll be 22%.
Tony, I don't fully understand the cash held in a shares ISA concept. What else would you hold in there?
Well, a shares ISA is for holding shares primarily and funds and bonds and all those type of investments. That's the idea of a shares ISA. Hopefully I probably explained it to you earlier, but people keep cash in there because so let's put it like this. You want to feed money into a global index tracker. You put your £20,000 in at the start of the year into your shares ISA.
This is how it currently works. The ISA provider might be paying you 3% or 4% interest. You probably won't get as much as putting it in a cash ISA, but you can get decent interest. And you say, I want to put a twelfth of it into the market and buy that global index tracker each month.
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Chapter 5: How can first-time buyers maximize their savings with ISAs?
And yes, of course, it'll be more red tape. Now we're going to move on to tax-free ISAs specifically for first-time buyers or want to be first-time buyers or someone who may be a first-time buyer in 10 or 15 years time. There have been two of these products. The Lifetime ISA or LISA is the one you can currently open. Its predecessor is the Help to Buy ISA. Both work in very roughly the same way.
You save money in them and then the state adds a 25% bonus on what you've saved when you use it towards your first property. So with the lifetime ISA, for example, you can put up to £4,000 per tax year in and the state adds 25% on top. So if you max it out with £4,000 in, that's £1,000 free per tax year. It is a huge benefit, though there are lots of ifs and buts.
such as with a lifetime ISA, you can only use it towards a property worth up to £450,000. That doesn't sound like a problem for most of the country, but it can be a real pain for those people in London and the Southeast, where typical first-time buyer properties can often be over £450,000. Anyway, what we're going to be talking about today is going to cause me some naming problems.
I've always collectively called the Lysa and the Help to Buy Issa first-time buyer Issa's, but now the government is proposing a new product called the first-time buyer Issa. Over to my chat with Adrian.
Let's move on to the first-time buyer story. So this is a consultation to replace the lifetime ISA with a new ISA called the first-time buyer's LISA. ISA. LISA.
ISA.
ISA. First-time buyer's ISA. Okay. Tell us about this then.
Okay, so the consultation ends in August. My guess, and it is only a guess, is that they're trying to bring this in from April 2027. It is a return in many ways to a product much closer to the Lifetime ISA's predecessor, the Help to Buy ISA. It's only for first-time buyers, as the name suggests. It's not going to be for retirement saving.
Remember that the Lifetime ISA is this slightly weird hybrid product for first-time buyers and also for savings over the age of 60, you can take the money out that George Osborne invented to try and take some cost out of his treasury to defer it and add the cost to future chancellors. So here's how it's going to work. The first-time buyer ISA is a minimum age 18. So far, there's no maximum age.
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Chapter 6: What are the benefits and drawbacks of the Lifetime ISA?
Always bring spare underwear and a change of clothes in your carry-on. Do you know what? It's relaxed me no end is putting one of the tracker devices, an Apple tag, putting one of those in your hold luggage.
Well, I mean, it will help you locate where your hold luggage is.
But if it's gone to Cancun and you're in Barcelona, then obviously it's a problem.
It's still not helping you, yeah. So the change of underwear is a good one. I think that's really important. And your medication, absolutely. Sam, used to work for an airline. So many people would get on a late-night flight from a winter sun destination wearing little more than a bikini and then wonder why they were freezing on the plane and on landing back in the UK too.
And no, we do not have any blankets we can give you.
Right, got it. Ali, work for BA Complaints. Don't complain your ice melted too fast. That's science. Well, in first class, you're paying a good amount, Ali. I think you're entitled to slow melting ice, at least.
We have so many good ones of these, but if you forgive me, Adrian, I'm worried we're not going to get through the Lifetime Isis stuff, which we need to do as well. Shall we finish there? Are you happy?
Yes, I'm happy. I'm really enjoying going through them. I know you'll do more of them on the podcast.
MUSIC
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Chapter 7: How do the proposed changes impact the first-time buyer ISA?
If they're regulated by the solicitor's regulation authority, you go to the legal ombudsman. Frustratingly, if you were passed from an FCA regulated claims firm to a solicitor, you may need to complain separately to each firm and go to both ombudsman. So C was the correct answer. Why were people misled?
Well, the regulator says people were signed up without agreeing to it or were pressured into it. And we have example on the podcast, the special part we did a couple of weeks ago. of a woman who suddenly found that she got a letter from a claims firm because she'd just filled out their online RUO'd motor finance and had not realised that that actually meant she was signing up to the claims firm.
In that case, make a formal complaint. You should not be paying them a fee. Say, I never signed up to you. I want to get out of it and go to the ombudsman. If you also feel you're misled about service costs or chances of success by the claims firm, you can make that formal complaint.
If you weren't receiving information you should have given, such as free details or cancellation, you make that complaint. And if you don't want to use the claims firm anymore because you know it's a mass redress scheme and you know you can do it yourself, then they can charge you a reasonable fee.
If you want to leave, but the reasonable fee should be based on the work they've done and hardly any work has been done yet because the whole scheme is still on hold. So what the regulator says is do not pay an exit or other fees if you want an independent check first.
CMCs and law firms are obliged to make it clear to customers, including on their website, that free ombudsman services are available. And I made it before the music played. Thanks for having me, mate.
Beautifully done. You take it easy. Stay in an air-conditioned environment, no press-ups and limited walking for the rest of the day. That is what I prescribe to you.
Yes.
Tie your shoelaces together. Do something with him. You've got too much energy and he's too hot for all that.
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Chapter 8: What practical tips can help you navigate the new ISA landscape?
To use parliamentary language, Peter, I refer you to the answer I gave a few moments ago. Yes, you can. The fact that you're now over 40 doesn't stop you opening an ISA to transfer. The only issue, and it's the same with Anna's question before you... I'm telling you what the rules are, but providers can have their own rules.
They don't have to accept transfers and they don't have to accept transfers from people who are over 40. So it is provider based. But I think most of the providers that I'm mentioning will allow you to open for a transfer. I'll have to double check that, but I think they will. Final straight, Simon. Let's do it.
So AR will kick us off. If the £450,000 threshold had increased in line with inflation, what would it be? You'd think that would give a clue as to what the revised threshold would be and hopefully help a bunch of people who are stuck.
So I can answer the question. If it went up with inflation, it would now the £450,000 based on 2017 would be around £620,000. But I think actually it would be more likely to go up with average house prices, which would be a more sensible metric. And that's what's always been muttered. And those of us who have been campaigning have been campaigning on that because we think that's more arguable.
So that would be £550,000. Whether you can use that as a read-across to what the new threshold should be is a very different matter. It just depends on what the government's thinking. They may well say, hey, we don't want to pelt people who are buying houses over £450,000. So I don't think you can do the read-across, but those are the answers.
Well, last but by no means least, we've got John. Can I use my licer to contribute to my partner's existing mortgage? If I don't own the home, what are the pros and cons of doing this?
No, effectively, you would be having to get a new mortgage to buy a new property. So you could potentially buy part of your partner's property separately. You'd have to talk to a solicitor about that one. But it is quite difficult to do. I think the real key is you want to save your LISA if and when you and your partner buy a new property together. and then you will be able to use it.
But it is very difficult to do a workaround within the rules in your situation unless you're going to take ownership of that property and get a mortgage yourself to take part ownership of that property. And with that, you have managed to complete the questions. Thank you very much. We've done cash ISAs. We've done help to buy ISAs. We've done lifetime ISAs.
And for the first time ever on this podcast, we've done the first time buyer ISA. And I'm done. That's it for this week. We tend to put out a new podcast every Thursday and Monday. Our Monday one is our question time episode where you can ask me absolutely anything and everything you like within reason, close brackets. I'm not sure I open the brackets, but I close them anyway.
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