Help to Save scheme extended - here’s how it can help you

All eyes were on Jeremy Hunt this week, as he detailed the government’s plans for the coming months in the Spring Budget; including an update on the Help to Save scheme.  

The Spring Budget follows on from the Prime Minister’s key priorities, which were set out in January and include halving inflation and growing the economy. 

The Bank of England has already tried to take control of inflation by raising interest rates and Hunt revealed the Energy Price Guarantee would be extended for a further three months to continue to reduce energy bills for UK households. 

In terms of growing the economy, Hunt detailed plans to boost employment by targeting a range of people from older workers to welfare recipients in an effort to get them back to work. 

A rainy day fund

For those on Universal Credit, the Spring Budget also highlighted Help to Save accounts and its attractive 50% bonus scheme. 

The good news is that applicants can now apply for an account until April 2025 as the government is keen for low-income earners to have a savings pot for a rainy day. 

The Help to Save scheme was due to end in September after its launch in 2018. However, the scheme is now even more important as many people are struggling with the cost of living crisis and finding it increasingly difficult to save each month. 

Saving little and often 

A Help to Save account is backed by the government which means that your money will be safe and secure. The account then allows you to save from £1 to £50 each month, but you don’t have to pay money in every month and you can pay in as many times as you wish - until you reach the £50 limit. 

The account will then reward you for saving with a bonus of 50p for every £1 that’s saved over four years. The bonus is paid at the end of the second and fourth years and it’s based on how much you’ve saved. 

For example, if you saved £50 a month for two years, you would get a tax-free bonus of £600. This means that you could end up with a pot of savings totalling £1,800 by 2025. 

If you decide to carry on saving, you’ll then receive another tax-free bonus of £600 after another two years, meaning you’ll receive £1,200 after four years of saving. 

However, it’s important to note that although you can close the account at any time, if you close the account early you might miss out on the bonus and you won’t be able to open another account. 

You can qualify for a Help to Save account if you live in the UK and you’re receiving Working Tax Credit, Child Tax Credit (and entitled to Working Tax Credit) or Universal Credit and you had a take-home pay of £658.64 or more in your last monthly assessment period. 

Millions missing out 

In our latest savings report, we discovered that as of March 2022 there had been almost 360,000 Help to Save accounts opened in the UK. This means that millions of people are missing out on the opportunity to earn a bonus from the government by saving a little each month. 

If you think you might be eligible for the Help to Save scheme, just visit gov.uk and enter your Government Gateway user ID and password to apply. You’ll also be asked to provide your UK bank details as you pay money into the account via either a debit card, standing order or bank transfer. 

For more information about the Help to Save scheme, read our guide or visit gov.uk for full terms and conditions, plus how it can impact your benefits.