People are urged to take advantage of the government’s Help to Save scheme offering a 50% bonus payment worth up to £1,200. In five years, £146m has been paid out.
Almost 450,000 people have opened a Help to Save account between September 2018 and March 2023, according to the latest figures from HMRC.
Overall, savers have ploughed £372.5m into the government scheme during that time, with £146m paid out in bonus payments in the last five years.
When launched in September 2018, it was geared towards the 3.5 million people in receipt of Tax Credits and Universal Credit in a bid to “improve the life chances of the disadvantaged”. It came after research suggested half of UK adults had less than £500 set aside for emergencies.
Last year, it was revealed that just 6.5% of those eligible had opened a Help to Save account as the pandemic led to soaring numbers receiving Universal Credit – 5.5 million.
Despite its poor take-up, Help to Save is considered a generous initiative for eligible savers, including those who are in receipt of:
- Working Tax Credit
- Child Tax Credit and are entitled to Working Tax Credit
- Universal Credit and they (with their partner, if it is a joint claim) had take-home pay of £722.45 or more in the last monthly assessment period.
Savers can deposit between £1 and £50 each month. They will earn an extra 50p for every £1 saved with bonuses paid in the second and fourth years of the account being opened. See YourMoney.com’s Help to Save guide for more information.
The bonus payment applies to the highest amount saved within the period which means there is flexibility to dip into the cash when needed. Savers who deposit the maximum amount of £2,400 will receive a bonus of £1,200 from the government.
Accounts can be opened online via the government website or via the HMRC app.
Nearly 383,000 account holders across the UK have made a deposit into their accounts and the average monthly deposit is £48. More than 90% of savers invest the maximum £50 each month. Savers can make as many deposits they like each month via debit card, bank transfer or standing order.
‘Attractive scheme’ but ‘priority to stay above the breadline’
Victoria Todd, head of the Low Incomes Tax Reform Group, said: “For those who are able to take part, the Help to Save account is a very attractive savings scheme, especially when the saver is able to maximise their bonuses.
“They can do this by paying in the maximum amount each month and making no withdrawals. Those who are eligible can still get bonus payments, even if they can’t save the maximum. That is why we recently welcomed the extension of the scheme to April 2025.”
Help to Save was due to close in September 2023.
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.”
