Navigating personal finances can be challenging, especially for those on a limited income. Recognising this, the UK government introduced the Help to Save scheme, which is designed to encourage and support individuals receiving certain benefits to build their savings.

Here’s an overview of how the scheme works, who is eligible, and the benefits it offers.

What is the Help to Save Scheme?

Help to Save is a government-backed savings account that offers a generous bonus to low-income earners. Launched in September 2018, the scheme aims to encourage regular savings by offering a 50% bonus on the amount saved over four years. This means that for every £1 saved, the government adds 50p, potentially providing a significant financial boost for those who participate.

Who is Eligible?

The scheme is targeted at individuals who are receiving certain benefits. Specifically, you can open a Help to Save account if you are:

• receiving Working Tax Credit
• entitled to Working Tax Credit and receiving Child Tax Credit
• or claiming Universal Credit and have earned income of £722.45 or more in your last monthly assessment period

It’s important to note that you need to be living in the UK to be eligible, though if you are a Crown servant or a member of the armed forces posted overseas, you can still apply.

How Does It Work?

Once you open a Help to Save account, you can save between £1 and £50 each calendar month. The maximum you can save over four years is £2,400. You don’t have to pay in every month, and you can make multiple deposits each month, provided the total does not exceed £50.

The key feature of the scheme is the bonus structure. Here’s how it works:

• Year 1 and 2 Bonus: After the first two years, you’ll receive a bonus of 50% of the highest balance you’ve achieved during those two years.
• Year 3 and 4 Bonus: At the end of the fourth year, you’ll receive another 50% bonus on the difference between the highest balance you’ve achieved in the second two years and the highest balance in the first two years.

This means you could earn up to £1,200 in bonuses over the four years if you save the maximum amount. No other savings scheme can come close to beating this.

Are There Any Age Limits for Help to Save?

One of the appealing aspects of the Help to Save scheme is its inclusivity in terms of age. 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 (unless you are a Crown servant or a member of the armed forces posted overseas).

Theoretically there is no upper age limit for Help to Save, but all the qualifying benefits do require you to be earning some work-related income. So if you are retired and living entirely off your pensions and benefits you are unlikely to qualify. If in any doubt, however, you can always apply anyway and see what response you receive.

Why Should You Consider It?

The Help to Save scheme provides a risk-free way to build a financial cushion. The bonuses are guaranteed and tax-free, which makes it an attractive option for those looking to save a small amount regularly without any risk of losing their money.

Additionally, the flexibility of the scheme allows you to save what you can, when you can. There is no penalty for missing a month or for withdrawing your money. However, frequent withdrawals might impact the bonuses, as they are calculated based on the highest balance achieved.

How to Apply

Opening a Help to Save account is straightforward. You can apply online via the official government website or through the HMRC app. To apply, you will need a Government Gateway User ID and password. If you don’t have one, you can create one during the application process.

Closing Thoughts

For those receiving eligible benefits, the Help to Save scheme offers a valuable opportunity to build a savings pot with the added advantage of tax-free government bonuses. It’s designed to be simple and flexible, making it easier for individuals to develop a habit of saving and improve their financial security. If you qualify, it’s certainly worth considering as a step towards a more stable financial future.

For more information and to apply, visit the official Help to Save website.