Help to Save schemes – how do they work?
The government has launched a new savings scheme called Help to Save. The new scheme was initially trialled in January 2018, then rolled out in stages and is now available to all those who are eligible from October 2018.
The savings scheme offers a free bonus on your savings, so it makes it even more attractive than a regular bank savings account to use. Most of us need to save more and when free money is offered, it makes it easier for us to get involved.
Even if you have unsecured debts such as credit cards or loans, you need an emergency fund, a nest egg, of at least £1000, so the new Help to Save scheme could just be your answer.
The Help to Save scheme is a government saving scheme to support working people on low incomes to build their savings. The Help to Save scheme is not to be confused with an Help to Buy ISA, for information about Help to Buy ISAs click here.
It enables regular savers to save up to £50 a month over four years (so a maximum of £2,400) and receive up to £1,200 in tax-free bonuses, that’s a 50p bonus for every £1 you save.
You don’t have to save every month and at the end of two-years, savers will get a 50% bonus based on the highest balance achieved. So even if you need to dip into your Help to Save scheme for an emergency, you still receive the bonus based on the highest balance you achieved.
Customers can carry on saving for another two-years and get further 50% bonus on their additional savings.
However, there are some criteria to having a Help to Save scheme. It will be open to UK residents who are:
- entitled to Working Tax Credit and receiving Working Tax Credit or Child Tax Credit payments
- claiming Universal Credit and have a household or individual income of at least £542.88 for their last monthly assessment period
Those living overseas who meet either of these eligibility conditions can apply for an account if they are:
- a Crown servant – or their spouse or civil partner
- a member of the British armed forces – or their spouse or civil partner
An estimated 3.5 million people on working tax credits or universal credits will be given the option have open an account.
How do I open a Help to Save account?
You can open a Help to Save account online via the Government website. You’ll need a Government Gateway account, but if you don’t have one you can set one up during the application process.
When you apply, you’ll need to provide your bank details. You can then make payments into the account using a debit card, bank transfer or standing order.
A challenge for savers is finding a safe home for your money with a good return. With banks and building society’s offering less than 2%pa, allowing people to save up to £50 a month and a 50% bonus, is a great solution.