Money for nothing
Help to Save is something to savour if you’re a low-income household, says Paul Lewis.
A Government scheme to help low-income households save has been extended and improved. Help to Save gives a bonus of 50p for every pound saved at the end of two years, and again at the end of four years. It is now available to anyone on Universal Credit who earned at least £1 in the preceding assessment period. (Until the change in April, earnings had to be equivalent to 16 hours at minimum wage.)
Individuals can deposit from £1 to £50 each month into their Help to Save account and can take the money out when they need it. At the end of two years, the Government pays a tax-free bonus of half the maximum amount in the account during that period. So, if you put in £25 each month for the first six months, you will have £150.
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You can then withdraw up to £149 – you must leave at least £1 behind – and even if you save nothing more, after two years you’ll get a bonus of £75, which is half the £150 maximum deposited. At the end of the fourth year, you’ll get another bonus of half the difference between the maximum amount saved in the first and second two-year periods.
That means that someone who puts in the maximum £50 a month for two years, and takes nothing out, will have £1,200 in the account and get a bonus of £600. If they continue to save £50 a month for another two years, they will have put £2,400 into the account and will get another £600 bonus – making a bonus total of £1,200. Bonuses are paid into the customer’s current account.
Despite its generosity, the government says that only around 62,000 people opened a Help to Save account in 2023/24. With 2.6 million working people on Universal Credit, it hopes to boost that take-up figure, and says another 550,000 people will also be eligible.
If you already have some savings, be aware that if the Help to Save account takes you above £6,000 total there will be a deduction from your Universal Credit of £4.35 a month for the first £1 above, and again for each extra £250.
For more information, and to apply, search gov.uk for ‘help to save’, or apply through the HMRC mobile app.