Low-income earners missing out on flagship Help to Save scheme: here’s how to take advantage of the 50% bonus

21 January 2019

Low-income earners can get a 50p bonus for every £1 they save, but figures show uptake of the savings incentive has so far been slow.

The Help to Save Scheme, launched in September 2018, has been taken up by just 80,810 savers so far, despite some 3.5 million being eligible.

John Glen MP, the economic secretary to the Treasury, revealed the low figure in response to a parliamentary question on 10 January.

Becky O’Connor, personal finance specialist for Royal London, comments: “In theory it’s a good idea as people on low incomes would benefit a lot from a small savings fund, as it could help them avoid costly payday loans and other forms of high cost credit.

“However, in practice, if you are on a low income, the problem is that you have very little, if anything, to set aside, in the first place.”

Get Help to Save

Anyone in receipt of working tax credit or universal credit can get a Help to Save account. You can save up to £50 a month, which the government will top up by 50%.

Partners who are both in receipt of either of these benefits can open individual savings account, receiving up £2,400 in extra savings help from the government.

The scheme will only affect your existing benefits if you or your partner have more than £6,000 in savings already. However, if you are in recepit of working tax credit, having more than £6,000 won't affect your eligiblity either. 

The 50% bonus is very generous in comparison with high-street banks’ savings accounts which typically much lower than 1%.

What to do with it

Once you’ve opened the account you can save for four years. If you save the maximum total amount each month, you’ll have £2,400 squirreled away.

The government pays a bonus on what you save. This will be added to your account at the two-year anniversary of opening the account, and again at the four-year mark.

So saving the full amount you will receive a £600 bonus after two years, and another at the end of the scheme. 

Adding the government’s bonus means you’ll have a respectable £3,600 savings pot.

However, as Ms O’Connor suggests, not everyone is able to make a maximum contribution. But that does not mean you shouldn’t put some money away.

Contributing just half the maximum each month, £25, with £600 free money from the government to help, would mean a £1,800 savings pot after four years.

The government says the scheme is intended to help those on lower incomes to build up a rainy-day fund. Having a savings pot to draw on in an emergency is much more cost-effective than resorting to expensive pay day lenders.

In order to benefit from the savings scheme, you’ll need to set up an account on the government website using your government gateway ID. For more visit: https://www.gov.uk/get-help-savings-low-income


In reply to by anonymous_stub (not verified)

So define low income please. Can a single pensioner on state pension with just £2,500 savings transfer them into one of these accounts at £50 a month over 4 years to get the 50% bonus, this would be good way to save for funeral as all savings accounts pay less interest than inflation rate.

In reply to by anonymous_stub (not verified)

I'm I entitled to get a loan I am I own my own house am I entitled to help

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