The Labour Party government has highlighted a significant financial opportunity for UK households, with a scheme that could provide a £1,200 boost to savings through HMRC. This initiative, known as Help to Save, rewards eligible individuals for every pound they save, offering a substantial incentive to build financial resilience.
How the Help to Save Scheme Works
Help to Save is designed to support those on Universal Credit or Working Tax Credits by providing a 50p bonus for every £1 saved. This means that over a four-year period, participants can earn up to £1,200 in bonus payments, significantly enhancing their savings efforts. The scheme was first launched in September 2018 and has been extended to April 2025, with plans to make it permanent and expand eligibility from 2028.
Eligibility Criteria for the Savings Boost
To qualify for the Help to Save account, individuals must be receiving Universal Credit and have had a take-home pay of £1 or more in their last monthly assessment period. Additionally, applicants must be living in the UK. For couples receiving payments jointly, both partners can apply separately for their own accounts, maximizing the potential benefits.
Key Features of the Savings Account
The scheme allows eligible people to save up to £50 per month in a secure savings account, with a minimum contribution of just £1. Over four years, the maximum total savings amount to £2,400, with the bonus potentially adding another £1,200. The 50% bonus is paid out at the end of the second and fourth years, based on the highest balance saved during those periods.
Bonus Payment Structure Explained
After the first two years, account holders receive an initial bonus equal to 50% of their highest saved balance. At the end of four years, a final bonus is awarded, calculated as 50% of the difference between the highest balances from the first and second periods. It is important to note that if the highest balance does not increase, no final bonus will be earned.
Account Closure and Future Plans
HMRC has confirmed that Help to Save accounts close four years after opening, and individuals cannot reopen them or open another account. However, they are able to keep all the money saved, including any bonuses earned. Originally set to end in September 2023, the scheme was extended under the previous Conservative Government and is now slated for potential permanency and expanded access in the coming years.
This initiative represents a valuable opportunity for low-income households to enhance their savings with government support, promoting financial stability and long-term planning.
