The government has launched a new initiative offering a bonus of up to £1,200 on savings for low-income workers. But how does it work and who qualifies?
The Help to Save scheme, which an estimated 3.5 million people are eligible to apply for, offers savers 50p for every £1 saved over a four-year period. Individuals can save a maximum of £2,400 over the course of the scheme.
Read on to find out about how Help to Save works and if you’re eligible to apply.
How does Help to Save work?
Help to Save started as a trial in January 2018 and is now being rolled out across the UK for eligible applicants.
Over four years, savers can deposit between £1 and £50 every calendar month into a Help to Save account, which is held with the Treasury-backed body NS&I.
These accounts are online-only but do offer telephone banking for people aren’t able to access the internet.
The scheme allows eligible savers to to get a 50p bonus for every £1 saved.
If you deposited the maximum of £50 every month for four years, you’d have saved £2,400 and earned £1,200 as a bonus – for a total of £3,600.
- Find out more: what are the different types of savings account?
How are Help to Save bonuses paid?
Help to Save accounts do not attract interest payments, but the bonus is substantial.
Account holders will receive a 50% bonus on their total savings after two years of holding the account. If you continue to save for the remaining two years, another 50% tax-free bonus will be paid on your additional savings.
These bonuses are paid into your personal savings account rather than your Help to Save account, so won’t count towards your savings limit.
You don’t have to make deposits every month to qualify for the tax-free bonus. You can also make withdrawals from the account at anytime.
- Find out more: how to find the best savings account
Who can apply for Help to Save?
The Help to Save scheme is available for UK residents who are:
- entitled to working tax credit and receiving working tax credit or child tax credit payments, or
- claiming universal credit and have a household or individual income of at least £542.88 for their last monthly assessment.
It’s also possible to apply for an account if you live abroad if you are:
- a Crown servant or their spouse or civil partner
- a member of the British Armed Forces or their spouse or civil partner.
To apply, savers can visit gov.uk/helptosave or use the HMRC app.
John Glen, economic secretary to the Treasury, said:
‘Savings shouldn’t be a luxury; they are an essential part of planning for the future.
‘But for some, putting away even a tenner each month can be a tough habit to get into. Whether you’re saving up to take the family on a much-needed holiday, or to take the next step in life, Help to Save is designed to make saving possible for every hard-working person in this country.’
- Find out more: protecting your savings
What happens if my circumstances change?
If you’re financial circumstances change and you stop receiving working tax credits or universal credit, you can still continue to save into your Help to Save account and receive any bonus that you might be entitled to.
It’s also possible to close your Help to Save account at anytime but it’s important to note that doing so too early could result in you losing your bonus and it won’t be possible to open a new one.