Low paid workers save £53m into government’s bonus scheme
Around 163,000 low income workers have opened the government’s Help to Save account, offering a 50p bonus for every £1 saved.
Over the past six months, 30,000 Help to Save accounts have been opened, representing a 23% increase on the previous half year figures. This brings the total to 163,000 since the scheme launched in September 2018.
Contributions to the scheme between August 2019 and January 2020 topped £21m – a 20% increase on the previous six-month period.
In total, Help to Save has attracted £53m in saving from the country’s lowest-paid workers, with the average deposit each month standing at £47, just under the £50 a month limit.
However, the HM Revenue & Customs figures also reveal that of the 163,000 accounts opened, just 87,000 accounts have money coming in each month. And 37,000 accounts are yet to receive a deposit at all.
Further, it was estimated that 3.5 million people would benefit from the government’s savings scheme, but the figures reveal just a fraction are taking advantage.
John Glen, economic secretary to the Treasury, said: “Putting aside some money every month, even if it is only a small amount, can make the world of difference. And with Help to Save, we’ll help you make that money go even further.
“It’s great to see so many people getting a 50% boost on their savings. I’d urge anyone eligible to sign up to this scheme, which is flexible, secure and easy to use.”
Who’s eligible and how does Help to Save work?
To be eligible, the following applies:
- 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 £569.22 for the last assessment period. Universal Credit isn’t considered part of household income.
- People living overseas 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.
You can save between £1 and £50 every calendar month where the amount will receive a 50% tax-free government bonus after two years, worth up to £600.
If you continue saving, you’ll receive another 50% tax-free bonus after four years – another £600.
So after four years, you could build a savings pot worth £3,600, split between £2,400 from your own contributions and a £1,200 bonus from the government.
You can make withdrawals from the scheme, though this will affect the size of your bonus. Savers don’t need to pay in every month to get the bonus either. You can set up a standing order to make regular payment or you can make one-off payments by debit card.
Accounts can be opened online or over the phone on 0300 322 7093 and the scheme is available to open until September 2023.
The bonus won’t affect Universal Credit payments and if you or your partner have £6,000 or less in personal savings, this will not affect how much Universal Credit you get.