Starting April 6, 2025, Universal Credit (UC) claimants will gain access to an expanded version of the Help to Save scheme, offering a unique opportunity to build savings. The program, which was initially restricted, is now open to all working UC recipients, regardless of their income level.
This change, as reported by Chronicle Live, could significantly impact those looking to improve their financial security. With the potential for tax-free bonuses, the initiative promises to provide substantial benefits over time for those eligible.
How the Help to Save Scheme Works
The scheme allows UC claimants to save between £1 and £50 each month, and for every £1 saved, the government adds an additional 50p. This means that over four years, claimants can potentially earn a bonus of up to £1,200.
Importantly, there is no requirement to make monthly deposits, offering flexibility to those participating in the scheme.
HMRC has said :
Did you know you could make 50p for every £1 you save with a Help to Save account? It’s a secure and flexible way to build up your savings—pay in what you can, when you can. If you receive Working Tax Credit or Universal Credit you might be eligible.
Bonuses and Savings Potential
The Help to Save scheme provides tax-free bonuses after two and four years of saving. The first bonus is based on 50% of the highest balance saved during the first two years, and the second bonus is based on the difference between the highest balance saved during the first and last two years. HMRC added:
You’ll get any bonuses you’ve earned even if you withdraw money. After your first 2 years, you’ll get a first bonus if you’ve been using your account to save. This bonus will be 50% of the highest balance you’ve saved. After 4 years, you’ll get a final bonus if you continue to save.
However, HMRC warned :
If your highest balance does not increase, you will not earn a final bonus.
This condition is essential for anyone looking to maximize the potential savings under the program.
An example provided by HMRC illustrates the benefit :
You pay in £25 every calendar month for 2 years. You do not withdraw any money. Your highest balance will be £600. Your first bonus is £300, which is 50% of £600. In years 3 and 4 you save an extra £200 to grow your highest balance from £600 to £800.
Your final bonus is £100, which is 50% of £200. Even though you withdrew some money after your balance was £800, this does not affect your bonus.
To be eligible for the Help to Save scheme, individuals must be receiving Universal Credit or Working Tax Credit. The scheme allows contributors to deposit money using a debit card, standing orders, or bank transfers, with a monthly cap of £50.
However, withdrawals must be made directly into a bank account, and the account will close four years after it is opened.
Support and Endorsements
The scheme has been widely endorsed by personal finance experts such as Martin Lewis, who praised it as an ‘unbeatable’ option for building savings. He advised :
If you know anyone on Universal Credit especially please do share this with them. It’s an unbeatable form of savings, that can add serious cash with no risk.
He added :
So look in help to save. If you’re eligible for it, you can put up to 50 quid a month in over two years, and then at the end you get 50% of the highest amount in.
He further explained:
So let’s just think of this. You put £50 in a month for a year, you’ve got 600 quid. You have a nightmare because this is all about building financial resilience and getting people to have some savings. You have a nightmare, your fridge is broken.
You need it for the kids. You spend your 600 quid you can’t afford to put any more in. At the end of the two years, the highest amount you had in was £600. You get 50% of that, which is £300.
So you get £300 and then whatever you’ve got in at that point, they do it again for the next two years, comparing what you have at the end with what you’re having at the beginning, and you get a 50% bonus.
Myrtle Lloyd, HMRC’s Director General for Customer Services, encouraged further uptake:
Hundreds of thousands of people are benefitting from Help to Save. It’s a great way of saving whatever you can, and the government will top up your savings by 50%. It’s quick and easy to apply online or via the HMRC app. Just search ‘Help to Save’ on GOV.UK to find out more and apply today.
