Financial challenges can affect anyone, at any time. Sometimes, these can be through no fault of your own, but can lead to necessary lifestyle changes. 

If you have a lower income, you may find it difficult to make significant monthly contributions to your savings. Instead, it’s likely that a lot of your income will be spent on essential outgoings, such as living costs or utilities. 

This is a familiar situation for many people, and since the COVID-19 pandemic began, there has been a sharp increase in Universal Credit claimants across the UK, with almost 5 million people claiming the benefits in February 2021. The Institute for Fiscal Studies has found this is around double the number seen prior to the pandemic (statistics from The Institute for Fiscal Studies: https://ifs.org.uk/publications/15528).

If you’re eligible for Universal Credit, Working Tax Credit or Child Tax Credit, you may qualify for the government’s Help to Save scheme.

To help, we’ve answered some of the key questions surrounding the scheme below.

1.    What is the Help to Save scheme?

The Help to Save scheme offers a four-year special savings account called a ‘Help to Save’. Each month, account holders can pay in up to £50 via standing order, debit card, or bank transfer to build up their savings. You do not have to pay in every month and you can only withdraw money from your Help to Save account to your bank account.

For every £1 you contribute, you will receive an extra 50p from the government, a 50% increase on what you pay in.

2.    Who is eligible?

To be eligible you must be a resident of the United Kingdom. You also need to be either:

• In receipt of Working Tax Credit
• Entitled to Working Tax Credit and receiving Child Tax Credit
• Claiming Universal Credit (with your partner if a joint claim) and earned £617.73 or higher through paid work in your last monthly assessment period.
• It is important to note that if you receive payments as a couple, you and your partner can apply for your own Help to Save accounts, but you will need to apply separately

3.    How does it work?

When you reach the end of the first two years of this four-year account, you’ll can receive the first bonus payment into your bank account. If you saved the maximum amount, which is £1,200 over the two-year period, you’ll receive a £600 bonus. Even if you had to withdraw some funds prior to the two-year period ending, your bonus will be based on the highest amount you have had in your account.

After the first bonus, you can save for another two years until the account’s expiry. Your second bonus will be based on the difference between the highest balance from years one and two, and then three and four.

Your Help to Save account will close four years after you open it. You will not be able to reopen it or open another Help to Save account. You’ll be able to keep the money from your account.

You can close your account at any time throughout. If you close your account early, you’ll miss your next bonus and you will not be able to open another one.

 

 1.    What is the catch, and how do I apply?

There isn’t really any catch. The scheme will only affect your Universal Credit if what you save pushes you over the £6,000 personal savings threshold. The bonuses you receive are not counted as personal savings. 

Of course, if you don’t save, or withdraw a lot of money after the first two years, it will be a lot harder to get a larger bonus at the end of the four-year period.

The account is with National Savings and Investment, the UK government’s state-owned saving bank. This means your money is protected and secure.

To apply for the Help to Save Scheme, visit GOV.uk.

For any support with your personal savings, get in touch or call 0121 285 8528.

 

 

Supporting images:

https://pixabay.com/illustrations/piggy-bank-money-finance-banking-2889042/

https://pixabay.com/photos/money-profit-finance-business-2696219/