New ‘Help to Save’ scheme gives bonus to savers

The ‘Help to Save’ savings scheme was launched by the Government last month, aimed to encourage people on low incomes to save money. Depending on how much you save you could be rewarded with a bonus of up to £1,200!

Here is all you need to know about the new scheme.

Am I eligible?

To open an account you must:

  • Be a UK resident
  • Be entitled to working tax credit and receiving working/child tax credit payments
  • Claim universal credit and have a monthly individual/household income of £542.88 or more

If these apply to you you will be able to open a savings account up until September 2023.

How does it work?

It’s actually pretty straight forward. Depending on how much you can afford, you are able to save between £1 and £50 a month for two years. You do not have to save every month and the money you do save can be withdrawn whenever you need it.

At the end of the two years you will get a 50% bonus on what you have saved. You will then be able to decide whether to withdraw the cash and stop saving, or keep the account open for another two years and continue saving.

Your bonus will be paid into your bank account, not your savings account.

How do I open a Help to Save account?

Applications for a ‘Help to Save’ account can be completed on the Government website. You will need a Government Gateway account, but don’t worry if you don’t have one, you can set one up during your application.

You will be asked to provide your bank details allowing you to make payments into the account using a debit card, bank transfer or standing order and giving you access to withdraw your savings whenever you need them.

Some FAQs…

Are my savings secure? – Yes. They are 100% secure. Your savings are held by the National Savings & Investment platform, which is the Governments savings provider.

Do I need to be in work? – No. If you claim tax/universal credit as a household, and you qualify as a household, you will both be able to open an account. However, it’s one account per eligible person so you won’t be able to open a joint account.

Will my savings affect the benefits I receive? – If these are the only savings you have, no. If you have other savings then you may see an effect if your combined savings puts you over the universal credit savings threshold of £6,000. For every £250 you save over £6,000, you lose £4.35 per month of universal credit. Any savings over £16,000 will disqualify you from universal credit altogether.

The Help to Save bonus isn’t taxable so doesn’t count as ‘other income’ as normal savings interest does. So, if you get working tax credits, you shouldn’t see any effect on your benefits in the year the bonus is paid.

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