New Universal Credit users may be eligible for up to £1,200 cash back saving scheme
Latest figures from the Department for Work and Pensions (DWP) reveal it has processed 1.8 million Universal Credit claims as coronavirus causes individuals to struggle financially.
But as many are forced to turn to the welfare benefit system for the first time, the Low Incomes Tax Reform Group (LITRG) highlights that claimants may be able to open the government’s Help to Save account.
Launched in September 2018, Help to Save was aimed at the 3.5 million people in receipt of benefits, paying a bonus of 50p per £1 saved.
It allows low earners to put away up to £50 every month, with the amount receiving a 50% tax-free government bonus, up to £1,200 over a four-year period.
LITRG said new claimants may have a window of opportunity to open a four-year Help to Save account as they may now meet the eligibility criteria, such as being in receipt of Universal Credit.
Once the account is opened, savers remain eligible for the scheme for four years even if they cease to meet those conditions, such as coming off Universal Credit.
‘Take advantage when financial circumstances improve’
Victoria Todd, head of LITRG, said: “Saving spare cash may be the last thing on people’s minds in the current circumstances but new claimants of Universal Credit should give some thought to opening a Help to Save account if they are eligible to do so.
“While such individuals may not be in a position to save at the moment, the account remains open for four years from the point it is opened. Therefore, it may be possible to take advantage of the scheme when financial circumstances improve and such individuals might no longer be claiming Universal Credit.
“For those who claim Universal Credit as part of a couple, each partner can apply for their own Help to Save account if the eligibility conditions are met, further increasing the potential bonus payable.
“We hope the coronavirus pandemic, and its effect on people’s livelihoods, lasts no longer than necessary. The Help to Save scheme may provide individuals and families a much-needed boost to replenish their savings pots and to help re-stabilise their short-term financial security.”
Help to Save eligibility criteria
In order to be eligible to open a Help to Save account, first you must be in the UK and you cannot have previously opened a Help to Save account. You must also either:
- be entitled to Working Tax Credit and actually receiving either Working Tax Credit or Child Tax Credit payments, or
- be receiving Universal Credit and have earned income of at least 16 hours a week at the national living wage (from 1 April 2020, this is equivalent to £604.56 in a month) in your previous assessment period.
Payments made to employees furloughed under the Coronavirus Job Retention Scheme and traders under the Self-Employment Income Support Scheme will be treated as earnings, so these amounts will count towards the Help to Save earnings eligibility requirement for Universal Credit claimants.