Get a 50% bonus on savings with Help to Save scheme | moneyfacts.co.uk
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Derin Clark

Derin Clark

Online Reporter
Published: 02/03/2020

Over £53 million has been deposited into Help to Save, a Government saving scheme aimed at those on low incomes that offers a 50% bonus.

HM Revenue and Customs (HMRC) has revealed that the £53 million has been deposited into Help to Save accounts by around 163,000 savers. The accounts are only available to low-income workers and offer savers a 50% bonus on money saved into their account every two years for a maximum of four years, meaning that savers can get the bonus for a total of two times. Those with a Help to Save account are encouraged to save a minimum of £1 to a maximum of £50 every month, but this is not a requirement and it does not impact the bonus if money is not saved every month.

Commenting on the Help to Save scheme, John Glen, economic secretary to the Treasury, said: “Putting aside some money every month, even if it is only a small amount, can make the world of difference. And with Help to Save, we’ll help you make that money go even further.

“It’s great to see so many people getting a 50% boost on their savings. I’d urge anyone eligible to sign up to this scheme, which is flexible, secure and easy to use.”

How Help to Save works

Help to Save is only available to those receiving Working Tax Credit, entitled to Working Tax Credit and receiving Child Tax Credit or who are claiming Universal Credit and their household earned £569.22 or more from paid work in their last monthly assessment period. Saving into a Help to Save does not impact benefits received as long it is the only savings account the saver has open. In addition to this, if the saver stops claiming benefits, they can continue using their Help to Save account.

A Help to Save account can stay open for a maximum of four years. Savers can pay into the account once a month, but money does not have to be paid into the account every month. While money can be withdrawn from the Help to Save account, it must be paid into the saver’s bank account. The 50% bonus is added at the end of the second and fourth year. The second-year bonus is paid on the highest balance at any time during the two year period, so if £200 had been saved, but £50 had been withdrawn before the end of the two years, the bonus will still be paid on £200. The bonus paid after four years is paid on the highest balance in years three and four that exceeds the highest balance in years one and two. For example, if £200 had been the highest balance in the first two years, £50 had been withdrawn, but in years three and four an additional £200 had been saved into the account, the bonus will be 50% of £150 (£200 - £50 + £200 = £150). So, in total, this saver will have received £175 in bonuses over the four years.

A saver who was able to deposit £50 per month and who did not withdraw any of the money could get a maximum bonus of £1,200 over the four years on a savings deposit of £2,400. This would mean they would end up with a total savings of £3,600.

How competitive is a Help to Save account?

While a Help to Save account does not offer an interest rate, the 50% bonus beats the highest rate available on both savings accounts and ISAs. As such, savers who are eligible for a Help to Save account should consider it over opening a traditional savings account. Saying this, those with debt would likely be better off focusing on repaying their debts before considering opening a Help to Save account. All money saved into the account is protected and the account is run on a platform managed by the National Savings & Investment (NS&I).

A Help to Save account can only be opened through the Government website – for more information or to open an account visit https://www.gov.uk/get-help-savings-low-income.

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