HM Revenue and Customs (HMRC) has called on low income earners to open a Government-backed savings account in UK Savings Week. Help to Save is a Government-backed savings scheme that allows certain people who are getting Universal Credit to access get a “bonus of 50p for every £1 they save over 4 years”, the GOV.UK website explains.
According to the latest figures, 656,700 Help to Save accounts have been opened since September 2018, with savers depositing a total of £676.7 million into their savings pots, the Government says. With the account, people on UC can save between £1 and £50 each calendar month, paid in by debit card, standing order or bank transfer. It doesn’t need to be every month, though the maximum amount you can pay in is £50 per calendar month. Statistics show that 94% of people who have opened one save the maximum amount of £50 each month, according to the Government.
If the maximum were paid in to the account each month across the whole four years, it would amount to £2,400 over 4 years. Bonuses are then paid out at the end of the second and fourth years based on the amount saved, the website says. This would give you a boost of £600 after two years, and another after four (£1,200 in total).
You’ll get a final bonus at the end of the four years, provided you continue to save. This final cash boost will be 50% of the difference between two amounts:
- the highest balance saved in the first two years (years one and two)
- the highest balance saved in the last two years (years three and four)
This means if you take money out of the account, you’ll need to make it up before you can get the maximum bonus reward across the four years. If your highest balance doesn’t rise through continued saving, you will not earn a final bonus.
You can close your account at any time, but you’ll miss out on your next bonus if you do, and won’t be able to open another one.
It’s a one time thing, as after four years, you get the money from your account, which is closed for good. You can’t open another one after that.
You can open a Help to Save account if you’re in receipt of UC and you (with your partner if it’s a joint claim) had take-home pay of at least £1 in your last monthly assessment period, the Government website says.
The scheme is currently only open to claimants with earned income of some kind, which means that some UC claimants, most notably unpaid carers, are not be eligible.
But HMRC has reminded households that in 2028, the earning criteria will be removed for people that have caring responsibilities, making it open to all Universal Credit claimants, and resulting in an additional 1.5 million households becoming eligible.
The Government says the scheme will be also be more accessible from 2028 as it will be changed to deliver through a multi-provider model, instead of just one. That will allow banks, building societies and credit unions to offer the scheme directly to their eligible customers.
Economic Secretary to the Treasury Lucy Rigby said: “Help to Save is a really beneficial scheme that offers a 50% government bonus on whatever you are able to save. We want more eligible people to take advantage of it.
Peter Tyler, Director of Personal Banking at UK Finance, said: “Expanding Help to Save and enabling more financial services providers to offer the scheme directly is a positive step towards helping people build financial resilience.
“The scheme provides eligible customers with a great opportunity and incentives to develop regular savings habits.”
You can find out more about Help to Save, including the full eligibility criteria, on GOV.UK.
