What is the Help to Save Scheme?
Help to Save is a scheme set up by the government to give a helping hand to low-income earners who want to put some money away.
If you qualify, the government adds 50p to every £1 that you save – up to a maximum bonus of £1,200 – paid over four years.
In this guide, we’ll explore the Help to Save scheme in more detail. We’ll look at who’s eligible, how to open an account, what impact a Help to Save account will have on your benefits, and a few other frequently asked questions about how the scheme works.
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What is the Help to Save Scheme?
The Help to Save scheme was an idea launched by the government in September 2018.
The scheme is designed to help people with low incomes build up some savings. To do this, the government adds 50p to the account for every £1 you save.
The account doesn’t pay interest like a normal savings account – instead, it gives a bonus payment after 2 years. If you keep some money in the account for another 2 years, you’ll get a final bonus payment too.
Here’s an example:
You save £50 every month for 2 years – a total of £1,200.
You receive no interest on the money as you save – but when you’ve had your account for 2 years, you get a the maximum bonus payment of £600 added to your balance.
If you keep paying £50 and build another £1,200 in your Help to Save account, you’ll get another £600 bonus payment at the end of 4 years too.
The scheme is designed to be simple and easy to track – but the large bonuses and simplicity has made people wonder if there’s a catch somewhere in the small print.
In actual fact, not only is there no catch, the deal gets better when you read a little bit more about how the bonus payment is calculated.
Lets go back to our example:
You’re saving £50 every month and you’re almost at 2 years – you’ve got a total of £1,150 saved so far.
Then, disaster. Your car breaks down, never to move again. You need to withdraw all the money from your Help to Save account to put towards a new one.
Bad news? Well, it is for your old car – but not for your Help to Save bonus. The bonus payment is calculated based on the highest balance achieved during that 2 year period. So, even if you withdraw money – you’ll still get a bonus based on your highest balance.
That means you’ll get a bonus payment of £575 – even if your balance is back to zero.
The bonus resets after it’s paid, so if you can start saving again, you’ll be in a position to pick up your next bonus in a couple of years time – even if you need to call on your savings for help in the meantime.
Do I qualify for a Help to Save savings account?
The Help to Save scheme is only open to UK residents who receive certain benefits.
You’ll be eligible if you are:
- receiving Working Tax Credit
- entitled to Working Tax Credit, and receiving Child Tax Credit
- claiming Universal Credit and (with your partner if it’s a joint claim) earned a minimum of £658.64 from paid work in your last assessment period
If you get Universal Credit or Tax Credit payments as a couple, you can still apply for individual Help to Save accounts.
You may still be eligible if you’re living overseas. If you’re in the armed forces, a Crown servant, or a spouse or civil partner of either, then you can apply.
If you close your Help to Save account, you won’t be able to reopen it or open a new one.
What happens if you’re eligible for Help to Save now but your circumstances change?
You only have to be eligible for Help to Save on the day that you apply for your account.
If your circumstances change and you no longer get Universal Credit or Tax Credits, your Help to Save account will stay open and active and you can continue to save and enjoy the government bonuses.
Is Help to Save a good deal?
Your Help to Save bonus payment is like getting 50% interest on the highest balance of your savings account.
This isn’t just a good deal – it’s an amazing deal.
In 2022, even the best savings accounts available available from high street UK banks only offer between 1.5-3.5% interest – and if you withdraw your money, that interest will stop building.
If you’re choosing between a Help to Save account and another savings account, you’ll almost certainly be better of with your money in the Help to Save scheme.
Will Help to Save affect the benefits you get?
As long as your Help to Save account is the only place you have savings, then no – it shouldn’t affect your the benefits you get.
However, if you’ve got savings elsewhere, you might need to be a little careful. If you have £6,000 or more saved, you start to lose Universal Credit and any council tax reduction you qualify for.
When you hit £16,000 in savings, you will no longer be able be eligible for receiving universal credit and you will not get any council tax reduction.
What happens if you live with someone who also has savings?
If you live with someone you’re in a relationship with, their savings are considered when your benefit payments are calculated.
So, if the total amount you and the other person has saved is more than £6,000 – your benefits will be affected like we’ve described above. Also, if your combined savings are more than £16,000, then you will no longer be eligible for some benefits.
This combined savings rule is worth thinking about if you are both eligible for Help to Save scheme accounts. If you both save the maximum £50 every month then you could potentially end up with more than £6,000 in combined savings over the course of 4 years.
Is it better to save with Help to Save or clear debts?
We often talk to people about managing debts and debt solutions – so we get asked about the Help to Save scheme a lot. One of the questions a lot of people have is whether it’s better to save with Help to Save or use the money to pay off debts.
Whether it’s better to pay towards debts or save some money will depend on your circumstances.
If you’re really struggling with debts, then it’s probably better to work on reducing the amount you owe, rather than saving. This is especially true if you’re behind on payments or money worries are keeping you awake at night.
Another situation where paying off debt is a better option than saving is if you’re dealing with debts with especially high interest rates. Some payday loans, credit cards, and personal loans have interest rates higher than 20% that builds up every month – so even if you’re earning a 50% bonus on your savings, the amount you’re gaining won’t be very much.
All that said, there’s a reassuring feeling that comes with having some savings – so if you’re on top of your monthly payments and the interest rates your paying are fairly low, then Help to Save could be a good idea for you.
Don’t forget, if you do want to focus on clearing debts now, you can open a Help to Save account later. The Help to Save scheme will still be available until September 2023 – and even if you open an account towards the end of the scheme, you’ll still be able to save and earn bonus payments for the full 4 years.
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How do I open a Help to Save account?
There are different ways to open a Help to Save account. You can apply through the Gov.uk website or through the HMRC app. Alternatively, you can call HMRC and a helpline advisor will help you set your account up.
Let’s look at each in a little more detail.
Opening a Help to Save account online
You can apply for a Help to Save account using the dedicated page on the Gov.uk website.
When you do, you’ll need your Government Gateway Account Number (user ID) and the password you set. You’ll also need your nominated bank account number – so you can set up automatic savings.
Don’t worry if you don’t have a Government Gateway User ID – you can set one up online. You’ll just need a few personal details – including your National Insurance number.
Opening a Help to Save account using the HMRC app
If you already use the HMRC app to deal with things like tax credits or your universal credit payment, then you’ll be able to log-in as usual.
Scroll down on the main app page and you’ll see a box with details of the Help to Save scheme. Click here and the app will walk you through the application.
If you haven’t used the app before, you’ll need to set up a Government Gateway User ID online first, then sign in using these details.
Opening a Help to Save account over the phone
If you don’t feel totally confident setting things up online yourself – or you’d prefer to have some help with your application, you can always call HMRC and get one of their helpline advisors to assist you.
You can contact HMRC on 0300 322 7093 (Mon–Fri, 10am–6pm) – but put plenty of time aside if you plan to call, their lines are often quite busy.
How can you make payments to a Help to Save scheme account?
When you account is open, you can do things like make payments and generally manage the account through the Gov.uk website or through the HMRC app.
When your account is set up you’ll get an account and sort code that you can use to pay money into your Help to Save account using your banking app or in a branch.
You’ll also get a welcome pack from HMRC when your account is opened. This is full of useful information about how the scheme works and answers any questions you might have.
Of course, if you don’t have internet access or a device to manage your account on, you can always call HMRC on 0300 322 7093 (Mon–Fri, 10am–6pm).
How much can I pay – and when?
You can pay any amount you wish into your Help to Save account each month. You don’t have to make a payment at all if you have an especially tight month – but if you do, the minimum you can pay is £1 and the maximum is £50.
Most people do this by setting up a standing order. If you’re not sure exactly how much you’re going to be able to save though, it’s probably a good idea to just make a manual payment whenever you can – rather than worrying that a standing order will go out and leave you short.
If you want to make a one-off payment, you can do so using your debit card, your banking app, or by organising a transfer when you visit your bank.
Is there any penalty if I can’t save money and miss a month?
No. There’s no penalty if you skip a month – or any number of months – of saving to your Help to Save account.
The only downside is that you’ll be missing out on any bonus that you’d get – but it’s better to miss making a saving rather than missing payments elsewhere.
Can I pay more some months to top up previous lower payments?
It’s a fact of life that some months are more expensive than other months – especially when you factor in Christmas, birthdays, or times for new school uniform.
Unfortunately, if you’re making the maximum payment of £50 each month, you can’t add to this – so if you missed a month but could pay £100 the following month, this isn’t possible.
However, if you’re making a smaller payment – say £25 each month, you could always make a payment of £50 the following month if you have to skip a month.
£50 a month is the maximum you can pay in, regardless of how much you’ve paid before or what your overall balance is.
How can I withdraw money from my Help to Save account?
Withdrawing money from your Help to Save account is simple and straightforward.
You can manage your account (including making withdrawals) through the Gov.uk website or using the HMRC app.
If you don’t have internet access or a device to use, you can call HMRC on on 0300 322 7093 (Mon–Fri, 10am–6pm) and arrange a withdrawal over the phone.
Withdrawals take around three working days – so if you need the money urgently, it’s worth keeping this in mind and planning ahead a little if possible.
Where is my Help to Save bonus paid?
Lots of people think that their bonus payments will be credited to their Help to Save account – but this isn’t the case.
Instead, your tax free bonus will be paid into the bank account you linked to your Help to Save scheme when you set it up.
Is the Help to Save scheme run through a bank?
When you get a Help to Save account, it’s a little different to a UK bank account as it’s set up through the government’s National Savings & Investment platform – known as NS&I for short.
The NS&I is owned by the HM Treasury department of the UK government. That’s the same part of the government that offers premium bonds and similar savings products.
All the money that is saved with NS&I is backed by HM Treasury – something that no bank can offer. So, you can be 100% confident that your money is safe.
What happens when the four years of Help to Save is finished?
After the four year period that you can have a Help to Save account is finished, the account will be closed.
The money that you have in the account – along with any bonus payments that you’re owed – will be paid into the nominated bank account you set the scheme up with.
Does a Help to Save account help my credit rating?
No. Your credit rating is based on a record of credit you’ve applied for or taken and how you manage payments towards any credit you have.
Having savings doesn’t show up on a credit search – but having an emergency fund you can access if you need to cover a repayment can be useful and might help you keep your credit score up.
Can HMRC take money out of my Help to Save account if I owe them for other things?
In theory, HMRC could take money out of a Help to Save account if you have debts with them relating to other things – but it very rarely happens.
If you’ve ignored repeated demands for money from HMRC, they’ll start a debt recovery process. If this goes for a longtime without you paying what you owe, they have legal powers that allow them to take money from any UK bank account. Again though, this is very rare and most people manage to negotiate a repayment plan long before this is even considered.