Could you benefit from the Help to Save scheme?

Nick Daws spotlights the Help to Save scheme which, if you’re eligible, can give your finances a valuable boost.

Today I’m spotlighting a lesser-known government scheme which, if you’re eligible, can give your finances a valuable boost.

The Help to Save scheme is an initiative aimed at helping people on low incomes build up their savings. Offering generous tax-free bonuses, this scheme can provide significant benefits for qualifying individuals. 

Here’s everything you need to know.

What is Help to Save?

Help to Save is a government savings scheme designed for people on Universal Credit or Working Tax Credit. 

For every £1 you save into your account, the government adds a 50p bonus,  effectively giving you a 50% return. You can save up to £50 a month, with bonuses paid out at two key points over the four-year scheme.

How do the bonuses work?

Year two bonus: After the first two years, you’ll receive a bonus worth 50% of your highest balance during that period.

Year four bonus: At the end of the four years, you’ll receive a second 50% bonus based on the difference between your highest balance in years 3-4 and years 1-2.

So if, for example, you save the maximum £50 a month for two years, you’ll have £1,200 in your account. The government will then pay you a 50% bonus of £600.

If you continue saving £50 a month for the next two years, your balance excluding bonuses will be £2,400. You will then receive another £600, bringing your total bonuses to £1,200.

Putting it another way, in four years your investment of £2,400 will have accrued £1,200 in tax-free bonuses, giving you a total savings pot of £3,600. No bank savings account will offer you a guaranteed return anywhere near that!

Key benefits of Help to Save

High returns: As mentioned above, a 50% bonus is significantly higher than any bank savings account interest rate

Flexibility: You can save as little or as much (up to £50 a month) as you like.

No risk: The scheme is government-backed, so there’s no chance of it going bust. 

Tax-free: The bonuses are tax-free, and they aren’t treated as income for benefits purposes.

Easy withdrawals: You can withdraw savings any time if you need them (though frequent withdrawals may reduce your future bonuses).

No strings: The scheme is completely free and won’t affect your credit score. In addition, once you have been accepted on Help to Save, it doesn’t matter if your circumstances change and you no longer receive a qualifying benefit.

Who is eligible?

You may qualify for Help to Save if you are receiving one of the following:

• Working Tax Credit
• Child Tax Credit and you are entitled to Working Tax Credit
• Universal Credit and you (with your partner if it’s a joint claim) had take-home pay equivalent to at least 16 hours a week at the National Living Wage (from April 2024, this is equivalent to £793.17 a month) in your previous assessment period.

You must also live in the UK (or meet specific conditions if you live abroad as a Crown servant or member of the armed forces).

Are there any age limits?

There are no specific age restrictions for opening a Help to Save account, provided you meet the eligibility criteria related to benefits and the general requirement of living in the UK. 

All the qualifying benefits do require you to be earning some work-related income, however. So if you’re retired and living entirely off your pensions and benefits, you’re unlikely to qualify. If in doubt, however, you can always apply anyway and see what response you get.

Very important deadline

The Help to Save scheme is set to close to new applicants in April 2025, meaning time is running out to take advantage of this opportunity. 

While accounts will remain open for existing users for the full four-year term, anyone hoping to benefit from this scheme now must apply before the April 2025 deadline. This will enable you to maximize your savings and earn the full bonus amount available.

How to apply

Opening a Help to Save account is straightforward. You can apply online via the official government website or using the HMRC app. 

Note that you will need a Government Gateway User ID and password. If you don’t have one of these already, you can create one during the application process. 

Closing thoughts

For those receiving eligible benefits, Help to Save offers a valuable opportunity to build a savings pot, with the added advantage of tax-free government bonuses. 

The scheme is designed to be simple and flexible, making it easy for individuals to develop a habit of saving and improve their financial security. If you qualify, it’s well worth considering as a step towards achieving a more stable financial future.

For more information and to apply, visit the government website. Don’t miss this chance to turn small, regular savings into a significant financial boost, before the scheme closes to new applicants in April 2025. 

As always, if you have any comments or questions about this article, please do leave them below. 

Nick Daws writes for Pounds and Sense, a UK personal finance blog aimed especially (though not exclusively) at over-fifties.

Photo credits: Pexels