Millions of people on Universal Credit will be able to boost their savings after the Government revealed that its Help to Save scheme would be extended. The move was announced in documents released following the Chancellor’s Budget yesterday (March 15).
The Help to Save scheme is a savings account designed to help people who receive certain benefits build up their savings. There are bonuses awarded to those who save regularly and limits are achievable.
Originally, the scheme was due to end in September of this year. However, the Government has revealed that it will be extending the initiative to new applicants until April 2025.
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What is the Help to Save scheme?
Help to Save is a type of savings account. It allows certain people entitled to Working Tax Credit or receiving Universal Credit to get a bonus of 50p for every £1 they save over 4 years.
How does the Help to Save scheme work?
Account holders can save between £1 and £50 each calendar month. Money does not have to be paid each month and it can be paid by debit card, standing order or bank transfer making saving easy and stress-free.
There is no limit on the amount of times deposits can be made to the account as long as the combined total does not exceed £50. At the end of the second year of having the account, bonuses will be paid on the amount saved.
How much are the Help to Save bonuses worth?
For every £1 paid in, account holders will receive a bonus of 50p. This is paid at the end of years two and four of having the account.
After your first two years, you’ll get a first bonus if you’ve been using your account to save. This bonus will be 50% of the highest balance you’ve saved.
After 4 years, you’ll get a final bonus if you continue to save. This bonus will be 50% of the difference between 2 amounts:
the highest balance saved in the first 2 years (years 1 and 2)
the highest balance saved in the last 2 years (years 3 and 4)
If your highest balance does not increase, you will not earn a final bonus.
The most you can pay into your account each month is £50, which is £2,400 over four years. The most you can earn from your savings in 4 years is £1,200 in bonus money. Your bonus is paid into your bank account, not your Help to Save account.
Who is eligible for a Help to Save account?
You can open a Help to Save account if you’re receiving:
Working Tax Credit
Child Tax Credit – and you’re entitled to Working Tax Credit
Universal Credit and you (with your partner if it’s a joint claim) had take-home pay of £658.64 or more in your last monthly assessment period. If you get payments as a couple, you and your partner can apply for your own Help to Save accounts. You need to apply separately.
How to apply for a Help to Save account
You can apply directly via the Government website. You’ll need a Government Gateway ID and password to apply, are available to sign up for on the gov.uk website, too. You’ll be asked to provide your UK bank details when you apply.
Should I get a Help to Save account if I have debts?
Martin Lewis, the founder of Money Saving Expert, has previously praised the Help to Save scheme as being able to give people the “best of both worlds”. He said: “The great concern with Help to Save was that it would encourage people to save when they should instead be paying off debts, including some extremely expensive ones like payday loans.
“Yet they've managed to work a structure that lets people possibly have the best of both worlds. The fact that you're given the bonus based on the highest amount you've saved, rather than the amount that you actually have in there, means you can build up your savings until you have an emergency that you would otherwise have borrowed for, and then use your savings instead of borrowing.
“But you'll still be rewarded for the fact that you saved in the first place. It's a very clever scheme and one that will work for many people. Of course though, if you've extremely expensive debts, rather than saving, it's best to try and clear those first.”
Thanks to the Government’s extension, new accounts can be opened up until April 2025, meaning that it’s possible to pay off bigger debts and then start saving later.
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