Many people on low incomes who wish to build up a savings pot can now register for a government-incentivised Help-to-Save account. The launch of the new account follows an eight-month trial, with over 45,000 customers who deposited over £3 million.
The new scheme is easy to use, flexible and secure, will help those on low incomes build up a ‘rainy day’ fund, and encourage savings behaviours and habits. How much is saved and when is up to the account holder, and they don’t need to pay in every month to get a bonus.
The scheme, administered by HMRC, will be open to UK residents who are:
- 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 their last monthly assessment period (though note that payments from Universal Credit are not considered to be part of household income);
- People living overseas who meet either of these eligibility conditions can apply for an account 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.
Account holders can save between £1 and £50 every calendar month and accounts last for four years from the date the account is opened. After two years, savers get a 50% tax-free bonus on savings. If saving continues there is another 50% tax-free bonus after four years.
On maximum savings of £2,400 over 4 years, the overall bonus would be £1,200. To apply, savers can visit www.gov.uk/helptosave or use the HMRC app. Opening an online account should be straight-forward and take less than five minutes.