With the price of basic necessities skyrocketing, many people are finding it harder to make ends meet. This pressure is even greater for those who are retired, living with disabilities, or too unwell to work, especially if they rely on Universal Credit.
If you are a working professional, you may have the option to take out a small personal loan for emergencies. But this isn’t always possible for people already in a financially vulnerable position.
This is why, to support low-income individuals, the government has introduced the Help to Save scheme, designed to help build savings and promote long-term financial stability.
Help to Save is a savings account that offers a 50% bonus on the highest amount in your account at the end of a two-year and four-year period. Both the bonus and your savings are tax-free.
Interested in learning more? Let’s explore the Help to Save scheme and how it fits into your financial planning.
What is a Help to Save Account?
Help to Save is a savings account available to people who receive Universal Credit or are eligible for Working Tax Credit. This account is government-backed, so your money and bonus are safe. The best part is that you can save anywhere between £1 and £50 per month. However, contributing every month isn’t mandatory.
Within a calendar month, you can transfer money into your Help to Save account as many times as you like, as long as the total doesn’t go over the £50 monthly limit. Deposits can be made via debit card, standing order, or bank transfer.
Withdrawal from this account is possible only to your savings account; you cannot withdraw cash directly. You can withdraw money at any time, but processing might take up to 3 days.
How is the Bonus Calculated?
Unlike a traditional savings account, Help to Save doesn’t pay interest; instead, you receive a government bonus based on how much you’ve saved. The account runs for four years, with two bonus payouts – one after the first two years and another at the end of four years. The government pays 50% of the highest balance you have in your account during the biennial period.
Let’s look at an example for ease of understanding:
If you save the maximum £50 each month, you’ll have saved £1,200 by the end of two years. As long as you don’t withdraw any of it, your highest balance is £1,200, which makes the amount of your bonus £600 (50% of £1,200).
However, say after saving for 20 months, your balance is £1,000, but you withdraw £200 for a car repair. By the two-year mark, your balance is £800, but your bonus is still based on your highest balance, which is £1,000, meaning you’ll receive £500.
After the four-year mark, you will get another 50% bonus for the difference between the highest balance achieved during the second two-year period and the first two-year period. For example, during the first two years, the maximum amount reached was £400. The following two years, you achieved the highest balance of £1100. The bonus will be calculated on £700, which is £350. The maximum total bonus you can receive is £1200 (£600 after every two years).
What Will Happen To My Help to Save Account After Four Years?
The Help to Save scheme is only available for four years, after which the account will automatically close. The money you save and the total amount of your bonus will then be transferred to your nominated bank account.
How Does My Help to Save Account Affect My Finances?
Wondering what happens if your financial situation improves during the four years? Will your Help to Save account be closed?
No, it won’t. Your eligibility is assessed only at the time you open the account. So even if your circumstances change later, your Help to Save account will remain active for the full four-year period.
Yet another important question is whether saving money in this account affects other benefits.
If your total savings, including the amount in your Help to Save account, don’t exceed £6000, the Universal Credit assistance isn’t impacted. The savings or bonuses earned through the Help to Save scheme will not affect the Working Tax Credit. It will also not affect the Housing Benefits payment.
Final Words
The Help to Save scheme is valid till 2027, and you can apply through the government gateway. The account is held with the NS&I, and you can manage it through the HMRC app or the GOV.UK website.
One thing to remember is that once you close the account, you can no longer reopen it, so even if you cannot make regular payments, it’s a good idea to keep the account open.
The Help to Save scheme is designed to assist low-income earners, and the bonus is higher than what most high-interest savings accounts currently offer. This means if you are consistent with your payment, you can expect a handsome payout.
