Help to Save scheme explained

If you’re on a low income and trying to make ends meet, putting away savings each month can be hard. The government’s Help to Save scheme is designed to provide help for low-income savers. On this page, you’ll learn everything you need to know about the scheme, including how Help to Save works, if you’re eligible, how it might affect your benefits, and how to apply for a government savings account.

Help to Save is a type of savings account backed by the government that’s designed to help low-income earners save. Under the government saving scheme, you will receive a bonus of 50p for every £1 you pay into the account over four years.

If you’re eligible to open a Help to Save account (see more on Help to Save scheme eligibility below), you can save up to £50 into your account per month, although you’re not required to save every month.

You can make any number of deposits each calendar month, as long as the total amount you save doesn’t exceed £50. As Help to Save accounts are a type of easy access account, you can make withdrawals whenever you need to without incurring any penalties. However, bear in mind that withdrawing money could affect the value of your bonus payment. These withdrawals can only be made into your bank or building society account.

When is the Help to Save bonus paid?

On your account’s two- and four-year anniversaries, the government will pay you a 50% bonus on your savings up to a maximum of £1,200. The bonus you’ll get is based on how much you’ve saved.

After two years, you’ll get your 50% bonus on the highest amount you’ve been able to save during that time. For example, if the largest balance you’ve had in your Help to Save account over two years is £600, you’d still get a £300 bonus, even if you’ve made withdrawals during that time and your balance has reduced.

After four years, the bonus is calculated slightly differently to your first one. Your second bonus is calculated as half of the difference between the highest balance you reached in the first two years and the highest balance achieved during the third and fourth years. This means that you will not be eligible for the second bonus at all if the highest balance you reach during years three and four is lower than the highest balance in years one and two.

Here is an example of how this looks in practice:

Years one and two:

Suppose you saved £600. Due to unforeseen expenses, you have to withdraw the entire £600 before the end of the two years. Despite the balance having reduced to zero at the end of the two-year period, you’ll still receive a £300 bonus.

Years three and four:

You start saving again, and manage to save £1,000. At the end of the four-year period, you’re eligible for a £200 bonus. This is calculated as £1,000 - £600 = £400, with the bonus being 50% of the difference between your highest balance from this period and your highest balance from years one and two.

What happens after four years of Help to Save?

Your account will be closed automatically after four years from the date of opening and your savings, including the final bonus payment, will then be paid into your chosen bank account.

You can earn two tax-free savings bonuses - one at the end of two years and a second at the end of four years. Both bonuses are paid directly into your bank account, not into your Help to Save account. After receiving the first bonus, you can choose to either continue saving into the account for another two years or close the account.

You can earn two tax-free savings bonuses - one at the end of two years and a second at the end of four years. Both bonuses are paid directly into your bank account, not into your Help to Save account. After receiving the first bonus, you can choose to either continue saving into the account for another two years or close the account.

To be eligible for a Help to Save account, you must be living in the UK. If you live overseas, you can apply for Help to Save if you’re a member of the British Armed Forces or their spouse or civil partner, or a Crown servant or their spouse or civil partner.

You must also meet one of the following criteria:

• You claim Universal Credit, and your household earned £722.45 or more in your latest assessment
• You receive Working Tax Credit
• You’re entitled to Working Tax Credit and receive Child Tax Credit

You can continue to use your Help to Save account even if you stop claiming benefits.

If you don’t have savings outside of those in your Help to Save account, it’s unlikely that saving into the scheme will affect your benefits entitlement. However, if you do have other savings, there’s a chance that paying into a Help to Save account could push you over the £6,000 savings threshold for Universal Credit or council tax reduction.

If your savings exceed the £6,000 threshold, the Department for Work and Pensions will deduct £4.35 a month in Universal Credit or £1 in council tax reduction for every £250 (or part of £250) of capital over £6,000. It’s also worth remembering that if you’re in a relationship with someone, and you live together, their savings will also be included in the £6,000 threshold.You won’t be entitled to Universal Credit or a council tax reduction if you have capital worth £16,000 or more. Read our guide ‘How much savings can I have on benefits?’ for more information and advice.

Once you’ve checked your Help to Save account eligibility, you can apply for the scheme through the Government Gateway. You’ll be asked to provide details of your personal circumstances as well as your bank details, and HMRC will then assess your application. Alternatively, you can apply using the HMRC app. If you have any problems applying, you can call HMRC on the Help to Save GOV.UK website to help you set up the account.

Once your application is approved, your new government savings account will be held by the National Savings & Investments (NS&I), which is backed by the Treasury. NS&I ensures 100% security for any deposits you make into the account.

An alternative to the Help to Save government scheme is to open a traditional savings account. You could consider opening an easy access account, or a notice account, or a fixed rate bond. If you’re looking for an account with similar conditions, such as making regular deposits and getting an attractive return, a regular savings account might be suitable. However, be aware of potential account restrictions that might limit access to your funds. Easy access accounts offer the greatest flexibility in terms of withdrawals and top-ups, making them ideal for building an emergency fund. Notice accounts boast competitive variable interest rates and allow you the flexibility of withdrawing your money after a set notice period, typically between 30 and 90 days. Alternatively, you might choose a fixed rate bond that locks your money away for a set period of time at a guaranteed interest rate, so you know exactly what your return will be.

If you’d prefer to open a savings account rather than a Help to Save account, register for a Raisin UK Account and log in to apply online today. It’s free to open savings accounts with competitive interest rates from our partner banks and building societies through our marketplace. What’s more, your money is protected by the FSCS deposit guarantee scheme, so why not give it a go today?