UNIVERSAL Credit claimants are being urged to make use of the government’s Help to Save scheme even if they are coming off the benefit.
MoneySavingExpert’s Martin Lewis said people who claimed Universal Credit during the pandemic but are now earning enough to stop receiving payments should still make use of the government savings account while they can.
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Help to Save accounts were launched by the government in 2018 to help those on low incomes starting saving.
Savers can put between £1 and £50 into the accounts every month for four years from when the product is opened.
The government pays a 50% tax-free bonus on the highest balance after two years and another at the end of the four-year period.
The accounts are available to people on Universal Credit.
Speaking on The Martin Lewis Money Show last night, Mr Lewis said Universal Credit claimants can get the government bonus after opening a Help to Save account even if their pay later improves.
He highlighted that the eligibility criteria for the product is only that savers are on Universal Credit when the account is opened.
This means you can still get the government bonuses on money saved in the account even if your income later increases and you come off the benefit.
Mr Lewis said: “All those on Universal Credit because of the pandemic and are hoping to come off, go and open one now while you can.”
How does Help to Save work?
Help to Save is a government savings account aimed at people on low incomes.
It is available to people who receive Working Tax credit, if you are entitled to Working Tax Credit and get Child Tax credit or if you claim Universal Credit.
Users can save between £1 and £50 each month and will get a bonus of 50p for every pound saved over four years.
The first bonus is paid after two years of saving on the highest balance you had in the account.
A final bonus will be paid after four years based on 50% of the difference between the highest balance in year two and in year four.
How much could you earn from Help to Save?
If you pay in £25 every month for two years and do not withdraw any money, your highest balance will be £600.
This will earn you a bonus of £300, which is 50% of £600.
If you save an extra £200 in the third and fourth year, your new balance will be £800 and your final bonus will be £100, which is 50% of the £200.
You can make withdrawals at any time but this may affect your final bonus.
The most you can save over the four years is £2,400 and the maximum bonus is £1,200 but that is still a pretty decent return on your savings that is difficult to match elsewhere.
If your Help to Save cash pushes you over £6,000 in personal savings, it could affect your eligibility for some benefits.
How to apply for Help to Save
You can apply for an account via Gov.uk but you also need a government gateway user ID and password.
If you do not have a user ID, you can create one when you apply.
For those who don’t have access to the internet, you can still get an account by calling 0300 322 7093.
You will need to provide your bank details when you apply as the bonus is paid into your bank account rather than into the savings account.
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