The Government's saving scheme for low-income earners, which can offer a £1,200 bonus payment, has been officially extended until April 2025 HMRC has confirmed today.
The Help to Save scheme is a savings scheme for people claiming certain benefits which gives you a bonus payment of up to 50% of the savings paid into the account.
So for every £1 put in the account, the Government will boost it by 50p.
The scheme was originally going to end in September of this year but it was extended in the Chancellors recent Spring Budget.
HMRC says three million people could benefit from the savings scheme as a result of the extension.
Over 350,000 people have opened a Help to Save account since its launch in 2018.
In order to get the £600 bonus you have to keep paying into the account every month for the next two years.
You can save between £1 and £50 each calendar month which you can pay into the account through either a standing order or bank transfer.
If you keep paying into the account; at the two year mark, the Government will pay a bonus of 50% of your highest balance throughout that time.
If you put in £50 a month for the next two years, you will have saved £1,200 of your own money.
This means you will also be eligible for a tax-free bonus of £600.
The Government also paid another bonus at the four-year mark too - so you could get a boost of £1,200.
You can apply for a Help to Save account if any of the following apply:
- You are receiving Working Tax Credit
- You are entitled to Working Tax Credit, and receiving Child Tax Credit
- You are claiming Universal Credit and (with your partner if it's a joint claim) earned a minimum of £658.64 from paid work in your last assessment period
You also need to be living in the UK to be eligible for the scheme.
If you get Universal Credit or Tax Credit payments as a couple, you and your partner can still apply for your own Help to Save accounts.
HMRC says it takes "less than five minutes" to sign up and you can apply for a Help to Save account on GOV.UK or through the HMRC app.
Commenting on the news of the extension, Myron Jobson, senior personal finance analyst, at interactive investor, said: “On paper, Help to Save is a great initiative to help instil a culture of savings among the nation’s most cash-strapped individuals.
But for those who’ve felt the full force of cost-of-living squeeze, the priority has been to stay above the breadline.
“If you are on a low income, the problem is that you have little, if anything, to spare to save at the end of the month. Many people make the mistake of trying to save when they are in debt, and yet the cost of debt for most usually vastly outweighs the gain of saving.
“For those who can afford it, a 50% savings bonus is too good a carrot to pass up.
"Those on a low income should consider whether saving is a priority if it would mean they would have difficulty meeting outstanding debt commitments, particularly priority debts such as council tax, as a result. In a perfect world, everyone would have at least three-to-six months’ worth of essential outgoings in savings.”
In his Spring Budget, the Chancellor also said he would be looking for longer term options to support low-income savers going forward.
The Government published a consultation on the Help to Save scheme in April, seeking views on how the scheme can be reformed and simplified.
