Saving money can be hard work. Doubly so if you’re struggling financially. But while it can be tough to set aside money for the future when you need it right now, this is also the time when saving is most important.

Thankfully, there are schemes out there to support those who need a helping hand with saving. The aptly named Help-to-Save scheme was created to assist people on low incomes and benefits, but how does it work, who is eligible, and how can you apply? 

What is the Help-to-Save scheme?

Help-to-Save is a government-backed savings account that can provide a bonus of 50p for every £1 saved for up to 4 years. It lets you save between a minimum of £1 and a maximum of £50 every month and will pay you a 50% bonus on your savings at the end of 2 and 4 years respectively. 

The maximum amount you can get a bonus on is £1,200, calculated from the highest amount you have saved over each 2-year period rather than the balance at the end. We will have more on how Help-to-Save works and the rules around payments in this guide.

At the end of the 4 years, your Help-to-Save account will close, and you’ll receive the money from your account. You won’t be able to reopen it or open another Help-to-Save – it’s very much a one-time deal, but every penny you have saved, plus your bonus, is yours to keep.

Who is eligible for a Help-to-Save account?

The Help-to-Save scheme was designed to help people on low incomes and benefits save money. As such, you need to meet specific criteria to be eligible. You can apply for a Help-to-Save account if you’re receiving any of the following:

  • Working Tax Credit

  • Child Tax Credit (and entitled to Working Tax Credit)

  • Universal Credit and earned £617.73 or more from paid work in your last monthly assessment period

Couples who receive Universal Credit can apply for separate Help-to-Save accounts if eligible. You can check your eligibility on the GOV.UK website. It’s worth noting that you only need to be suitable for Help-to-Save on the day you apply. You can keep your Help-to-Save account for a full 4 years, even if your circumstances change after it opens. So you can contribute to your savings when you’re no longer receiving Tax Credits or Universal Credit.

How does a Help-to-Save account work?

Help-to-Save accounts work on a simple premise, but it could be advantageous if you’re able to save the maximum amount over the 4 years. You get a 50% bonus paid by the government on your savings, effectively 50p for every £1 you save. This is tax-free. 

Paying in

You can pay into your Help-to-Save account as many times as you like each month, although the most you can pay in is £50 a month. Unlike some other savings accounts, you do not have to pay in money every month, and you can make a withdrawal as many times as you like, although this will affect how big your bonus is after 2 and 4 years. 

If you can afford to make the maximum £50 payment each month, then it might be worth setting up a standing order from your bank account to avoid missing payments. While there is no penalty for missing payments, you can’t overpay later to make up for underpaying on a previous month. In this case, your maximum bonus will end up less than it could have been.

Help-to-Save bonuses

When it comes to bonuses, this is how they work. You get a 50% on the highest amount you have saved at the end of the 2nd  year. At the end of the 4th year, you’ll get a final bonus, which will be 50% of the difference between 2 amounts:

  • Year 2 bonus is based on the highest balance saved in the first 2 years

  • Year 4 bonus is based on the highest balance in the final 2 years

Over the 4 year lifespan of the account, the most you can pay is based on the maximum £50 per month is £2,400. This would result in a bonus of £1,200. The compensation is paid into your primary bank account rather than your Help-to-Save. 

The bonus payments are based on the highest balance rather than the current balance, so you can take money out. However, if you withdraw a significant amount of money after your first bonus, you may not get a second bonus if the amount you save doesn’t exceed the amount saved in the first two years. Taking money out will also make it harder to grow your account and earn the most significant rewards.

Key features of a Help-to-Save savings account

While the Help-to-Save scheme is relatively simple, we appreciate it might feel like a lot to remember, so here’s a quick rundown of the features of a Help-to-Save account. 

  • Designed for those on low incomes and benefits

  • Available to those who meet the eligibility criteria

  • You can contribute a minimum of £1 and a maximum of £50 per month

  • If you underpay one month, you cannot overpay the next

  • There are no limits on the number of payments or the number of times you withdraw cash

  • As a reward for saving, the government pays a 50% tax-free bonus after 2 and 4 years

  • Rewards are sent into your primary bank account

  • You can keep your savings account even if your circumstances change after application

  • You can only open a Help to Save account once

  • At the end of 4 years, your Help-to-Save account will close, and you cannot reopen it

  • Help-to-Save accounts are for individuals only; you cannot open joint accounts

What happens if I close my Help-to-Save account?

While you can close your account at any time, if you do so before the end of the first 2 years, you will not get a bonus. 

It’s worth keeping your Help-to-Save account open even if you can’t pay into it every month. Once it’s closed, you will never be able to reopen it or open another Help-to-Save. As long as the account remains open, you’ll still be eligible for a 50% bonus on your highest balance. 

Is a Help-to-Save account safe?

Yes, the Help-to-Save scheme is safe as it is government-backed and run by the National Savings & Investment (NS&I) platform, which means your savings are 100% secure.

How to apply for a Help-to-Save account

If you believe you’re eligible, you can apply for a Help-to-Save account via the GOV.UK website. This is what you’ll need: 

  • A Government Gateway user ID and password (you can create one when you apply)

  • Your UK bank details (you need a bank account to open a Help-to-Save account)

  • Your National Insurance number

You may need to create a Government Gateway account if you don’t already have one. It’s the same account you use to access your personal tax credits. Alternatively, you can also sign in using the HM Revenue & Customs (HMRC) app on your smartphone or tablet. 

Of course, not everyone has access to a computer or smart device. In this case, you can also call the HMRC helpline on 0300 322 7093, and one of their advisors will help you set up an account.  

How do I pay money into my Help-to-Save account?

Simply log in to your Help-to-Save account online via GOV.UK to pay money into your account. As we mentioned earlier, you could also consider setting up a standing order from your bank account to avoid missing payments. 

HMRC is also working on a way for employers to deduct contributions from salaries and pay them into your Help-to-Save. Again, if you don’t have access to a computer or the HMRC app, it’s worth calling the government helpline on 0300 322 7093 for advice on how to pay.

Why open a savings account?

Whether you’re saving up for a large purchase or a one-off expense, putting cash to one side for emergencies, or preparing for your future, it’s never too late to start saving. 

There are many good reasons for doing so and very few circumstances when setting aside some money is not a good idea. The main one being if you’re already having difficulty making payments, particularly priority bills such as your utilities and council tax. In this case, your money is best off used to cover those expenses. 

Another exception is if you have debts, especially those you would be much better off paying off as soon as possible such as payday loans. Generally, it’s sensible to pay debts off before you start saving, particularly as the interest on debt is usually higher than the interest you can make on your savings. 

When it comes to Help-to-Save accounts, this general rule still applies.

Should I pay off my debts before opening a Help-to-Save account?

While it makes sense to pay off debts before opening a savings account, the benefit of a 50% bonus on your savings means that it might be worth doing both. Why? The returns on your Help-to-Save account are simply better than any other savings account on the market. Again, the bonus is based on the highest amount you have saved rather than the balance. So you could withdraw money if you have an emergency which you may previously have used a loan to cover.

While it’s often best to clear any debts before saving, the Help-to-Save scheme could be so beneficial to those on low incomes that it’s a valid exception to the rule. Whether you should pay off your debts before opening a saving account is a common concern. For more like this, check out savings account FAQs

Is Help-to-Save better than a regular savings account?

In short, yes. Most regular savings accounts pay between 1% and 3% on your savings, while a Help-to-Save offers the equivalent of 23%. If you’re eligible, it is by far the most rewarding savings account. For those who do not qualify for Help-to-Save, we also have a guide for helping you to choose a savings account.

Will Help-to-Save affect my benefits?

It’s possible that opening a Help-to-Save account could affect your benefits. It depends on your individual circumstances. Generally, Help-to-Save will only affect your eligibility for certain services if you and your partner build up savings of more than £6,000. Suppose your savings are less than £6,000 in total. In that case, your Help-to-Save account will not affect your Universal Credit, Working Tax Credit, or Housing Benefit.

Once again, you and your partner can save up to £6,000 without these benefits being affected. It’s also worth noting that because the Help-to-Save bonus is not taxable, it doesn’t count towards your income as far as Tax Credit goes.

Can I have a Help-to-Save account if I leave the UK?

Although Help-to-Save is a UK scheme, you do not need to close your account if you leave the country temporarily. There are rules around how long you can make payments into your Help-to-Save. For example, 1 month if you’re claiming Universal Credit and 8 weeks if you’re receiving tax credits. However, there are exceptions where this could be extended to 6 months. These include absences connected to the death or illness of family or those employed for long periods overseas, such as mariners or continental shelf workers. 

A final note on Help-to-Save accounts

The Help-to-Save scheme was introduced for those on low incomes and specific benefits, who might otherwise struggle to save money. It has proved popular, and today, more people than ever are eligible to apply. If you’re on a low income, claim Universal Credit, or receive Tax Credits, this could be a great way to build up your savings.

6 May 2021