MILLIONS of people on Universal Credit and benefits can get a £1,200 cash boost after a major scheme was extended.
Three million more people could benefit from the extension of the Help to Save scheme, according to HM Revenue and Customs (HMRC).
1
Help to Save is a government initiative designed to encourage those on benefits to save money.
The scheme had previously been due to end in September 2023 but it was extended until April 2025 in the Spring Budget.
It means that benefits claimants have even longer to earn free cash while they save.
More than 359,200 people have opened savings accounts since its launch in September 2018.
Under the scheme, savers can deposit between £1 and £50 a month into their account and will receive a government bonus, even if money has been withdrawn.
For every £1 put in the account, the government will boost it by 50p, up to a certain amount.
Bonus payments are paid in the second and fourth years.
Someone saving £2,400 – the maximum amount they could deposit over four years – would receive a £1,200 bonus from the government, paid directly into their bank account.
Most read in Money
Myrtle Lloyd, director general for customer services at HMRC, said: “Help to Save can encourage positive saving habits – no matter what you can afford to save – and the 50% government bonus payment can help savers when they need it most.”
But the extension of the Help to Save scheme comes at the same time that personal finance experts have warned those in debt to weigh up whether it’s worth taking advantage of.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “For those who can afford it, a 50% savings bonus is too good a carrot to pass up.
“Those on a low income should consider whether saving is a priority if it would mean they would have difficulty meeting outstanding debt commitments, particularly priority debts such as council tax, as a result.
“In a perfect world, everyone would have at least three-to-six months’ worth of essential outgoings in savings.”
How does the Help to Save scheme work?
Savers get a 50p bonus for every £1 they put in the account over four years.
You can save up to £50 every month, meaning you can get an extra £25 bonus.
That adds up to £300 in a year and up to £1,200 over the full four years of holding the account.
You don’t have to pay in each month if you don’t want to or can’t afford to, and you can put even just a couple of pounds in – it doesn;t have to be the maximum.
Account holders can also withdraw whenever they like – though this will impact the bonus received.
You can save money in the account through a debit card, standing order or bank transfer.
The account will automatically close four years after you open it. And you can’t apply for another one.
Anyone who closes the account before the four years are up, will miss the next bonus. Plus you won’t be able to reopen the account.
Who is eligible for Help to Save?
You can open a Help to Save account if you are:
- Receiving working tax credit
- Are entitled to working tax credit and receiving child tax credit
- cCaiming Universal Credit and you (with your partner if it’s a joint claim) earned £658.64 or more in your last monthly assessment period
If you get payments as a couple, you and your partner can apply for your own Help to Save accounts and will need to apply individually.
You also need to be living in the UK to be eligible for the scheme.
You can keep your Help to Save account even if you stop claiming benefits during the four years it is open.
If you or your partner have £6,000 or less in personal savings, including in your Help to Save account, this will not affect how much Universal Credit you get.
How can I apply?
You can apply online for an account through the government website.
You need a Government Gateway user ID and password to open an account, which you can create one as part of your application if you don’t already have one.
If you don’t have access to a computer with an internet connection, you can call 0300 322 7093 to set up an account.
You’ll need to provide bank details when you apply as the bonus is paid into your bank account rather than your savings account.
