The government savings account – aimed at the 3.5 million people in receipt of Tax Credits and Universal Credit – allows people to save a maximum of £2,400 over a four-year period.

As savings gain 50p for every £1 saved, this could result in a bonus of £1,200.

The Help to Save scheme, first announced by former Prime Minister David Cameron in 2016, was designed to “improve the life chances of the disadvantaged” after research revealed almost half of UK adults have less than £500 set aside for emergencies.

John Glen, Economic Secretary to the Treasury, said: “Savings shouldn’t be a luxury, they are an essential part of planning for the future. But for some, putting away even a tenner each month can be a tough habit to get into.

“Whether you’re saving up to take the family on a much-needed holiday, or to take the next step in life, Help to Save is designed to make saving possible for every hardworking person in this country.” 

Who’s eligible?

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 £542.88 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.

How does Help to Save work?

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.

The government confirmed 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.

Help to Save was due to launch no later than April 2018, but it was delayed and an eight-month trial launched in January this year, saw over 45,000 people deposit over £3m.

Phil Andrew, CEO of StepChange debt charity, said 98% of its clients have no savings at all and only 1% have £1,000 or more.

“We know that having £1,000 in rainy day savings virtually halves the risk of falling into problem debt, so helping lower income working households to build savings should be an important policy goal.

“The government’s impact assessment suggested only one in seven of those eligible are likely to use it in its first two to three years of operation. It’s vital for the government to make a real effort to promote the scheme if it is to have the desired result, and for all of us who work with eligible households to support that effort.”