Annie
27th Aug 2024
Reading Time:
9
minutes
Updated 5th April 2024
Saving when you’re on a low income seems impossible – but with the Government’s Help to Save account, it’s not only possible but lands you with a whopping 50% bonus.
Designed for those in receipt of Universal Credit, this little-known savings account is available for many people on a low income. Over the course of 4 years, you could earn a massive £1200 FREE BONUS from the Government.
Here’s everything you need to know about this well-kept secret!
- What is Help to Save?
- How it Works
- Who is Eligible for Help to Save?
- When Do I Get My Bonus?
- What Are the Advantages of Help to Save?
- What Are the Disadvantages?
- Will it Affect My Benefits?
- How to Open a Help to Save Account
- More Ways to Save Money on a Low Income
- Extra Ways to Earn More Money
What is Help to Save?
The Government wants to encourage those on low incomes to save money. But, is saving really worth it when interest rates are so low and you need all the cash you’ve got?
Help to Save is the answer. It’s an easy-access savings account that comes with an added Government bonus in the second and fourth year you hold the account. The bonus isn’t interest – so it doesn’t count towards the annual £1000 tax-free allowance for interest earnings.
For the self-employed, it’s also worth noting that these bonuses don’t count as generated income – so no need to add them on your tax return.
The key things to know about Help to Save are:
- You can save up to £50 a month (and there’s no penalty for months you don’t pay in)
- If you’re in a couple, you can each have a Help to Save account
- You’re eligible if you’re on Universal Credit and earn a household income of £793.17 in one month
- You only need to hit that earning amount once to qualify
- In years two and four you get a bonus worth 50% your total savings of the highest amount saved in that year
- You can withdraw your money at any time
- It’s a Government scheme, so your money is safe (unlike, for example, a savings app that’s not covered by the FSCS rules).
How does Help to Save work?
You can pay between £1 to £50 a month into the account for a maximum of four years. You don’t have to pay in every month, either.
Withdrawals are easy and penalty-free at any time you have the account – but taking money out will reduce the amount of bonus you’ll get.
At the end of the second year and fourth year of holding the account, you’ll get paid your bonus.
This bonus is a whopping 50% of the highest amount you’ve saved to date in the account. That’s not 50% on the account balance at the time of payment: it’s the highest balance you’ve achieved ever on the account in the bonus period (which is years 1 and 2, then years 3 and 4).
That’s an important distinction: it means that, if you REALLY need to dip into your savings, you can still get the bonus on them. You just won’t be able to get the biggest bonus (as you can only pay £50 in each month).
For example, let’s say you’ve saved £400 in your account by the end of the second year. You actually managed to save £500, but had to withdraw £100 for an emergency bill payment.
Your bonus would be £250 – 50% of £500 – as that’s the highest amount you’ve held in the account so far.
Of course, if you pay in £50 a month for the full four years, that means you’ve saved £2,400 of your own money – leading to a huge £1,200 bonus total from the Government. This is paid in two instalments: at the end of year two, the maximum bonus is £600 (if you’ve saved your full allowance of £1,200). At the end of year four, when the account closes, you’ll receive a further £600 if you’ve saved another £1,200.
There are no savings accounts AT ALL that offer such a generous and GUARANTEED return! If you can get this account, do it!
Who is Eligible for Help to Save?
You need to show that you’re earning enough money through some paid work before you become eligible for the account. Don’t worry: it’s not a large amount and can be earned by your household so if you and your partner both have some work, both incomes count towards the amount (as Universal Credit is shared for couples, too).
You can’t use your Universal Credit payment to qualify for the account. This is where the account encourages people to work and save: if you’re earning through a job, but have a low income, you can still receive some Universal Credit – and it’s these people that the account is aimed at.
If earning the minimum amount to qualify means you won’t get Universal Credit that month, don’t panic! Your Universal Credit doesn’t automatically stop the minute you earn more than your UC entitlement. This is why monthly assessments are in place: they track your average income over time, which is beneficial for those who are self-employed or have irregular work hours. To be eligible for a Help to Save account, you must receive Universal Credit, Working Tax Credit, or Child Tax Credit, earn at least £793.17 from paid work in your last monthly assessment period, and be a UK resident. If you stop receiving benefits after opening the account, you can still receive the bonuses for the full four years.
Bonuses are paid directly into your bank account at the two-year and four-year marks, not into the Help to Save account itself. You can choose to have it deposited into another savings account if you prefer. When the account closes at the fourth-year anniversary, you will receive your bonus payment and need to withdraw your full saved amount.
The advantages of Help to Save include tax-free bonuses, the ability for couples to each have an account, the option to save as little as £1 a month, the flexibility to withdraw funds if needed, and the encouragement of regular saving habits. The account is operated by NS&I, making it a secure place to save. Couples can both have an account, potentially saving enough for a house deposit with bonuses. Additionally, you could maximize returns by transferring bonus payments into a Lifetime ISA for an extra £1,000 tax-free.
There are few disadvantages to consider with a Help to Save account. You must meet eligibility requirements, debt could impact your benefit entitlement, and you cannot open another account after the initial four-year period. Savings may affect benefit entitlement, but the bonus is not taxable income. To open an account, link it to your Universal Credit online account, wait at least 7 days after the most recent assessment, and apply through the Help to Save Application link.
For those on a low income, finding £50 a month to save may be a challenge, but there are other ways to save and make money to supplement your Help to Save account.
There is no need to save a large amount, but if you can, you will receive the biggest bonus.
Here are some ways to increase your income, even if you have limited time.
Take surveys
Websites like Swagbucks and Toluna offer an easy way to earn small amounts of money in your spare time by taking surveys.
Spend a few minutes each day answering surveys about your spending habits, opinions, or lifestyle, and watch your funds grow!
Become a mystery shopper
Get paid to shop, visit the cinema, and even travel! Mystery shoppers review various places from retail stores to restaurants and airlines.
You will be assigned a mission to try a product or service and provide feedback on your shopping experience, both positive and negative, to help companies improve their service.
You will be compensated for your time and reimbursed for your purchases, making it a great way to enjoy free dining as well!
Sell your crafts
If you have a crafty hobby that you are passionate about, consider selling your creations. Whether you enjoy knitting or woodworking, there is a market for your items.
Platforms like Etsy make it easy to reach a wide audience and sell your products globally. Remember to declare all income and be mindful of platform and shipping fees.
Sell your skills
You can earn money by offering your skills as a tutor or taking on tasks like ironing. Writers and graphic designers are in high demand in the digital age, offering freelance opportunities to build a customer base and potentially start a full-time business.
You can earn up to £1,000 a year from ‘ad-hoc’ jobs before declaring income.
Register as a childminder
If you are already looking after your own children, consider becoming a registered childminder to care for other children. This role is ideal for parents who need flexible work hours.
Remember to declare all payments, including cash, in your tax return and Universal Credit assessments.
Use cashback websites
We recommend using cashback websites like Quidco and Topcashback to earn money on purchases you were already planning to make. This extra income is not taxable for basic-rate taxpayers.
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