Benefits to Bonus: 50% Top-Up on Savings Extended to 2027

The government’s Help to Save scheme has received a significant boost, with recent figures from HM Revenue & Customs (HMRC) revealing that £220 million in tax-free bonuses have been paid out to low-income earners. This popular savings program has been extended and its eligibility rules have been significantly widened, opening the door for millions more to earn a generous 50% government top-up on their savings.

The Help to Save Scheme: An In-Depth Guide

The Help to Save scheme is a government-backed savings account designed to encourage working people on low incomes to build up their nest egg by offering a highly attractive tax-free bonus.

Key Updates and Extension

The scheme, originally set to close in September 2023, has been extended and is now open to new applicants until April 2027. This extension ensures that more people have the opportunity to benefit from the four-year savings period.

Expanded Eligibility: A Major Change

The most significant recent update concerns who can apply. Effective from April 6, 2025, the eligibility criteria for Universal Credit claimants were dramatically relaxed.

Previously, Universal Credit claimants had to meet a minimum take-home pay threshold (which was recently around £722.45 in their last monthly assessment period). Now, the scheme is available to all working Universal Credit claimants who have earned at least £1 from paid work in their last monthly assessment period.

Current Eligibility:

You can open a Help to Save account if you are:

• Receiving Working Tax Credit
• Receiving Child Tax Credit and are entitled to Working Tax Credit
• Receiving Universal Credit and, from April 2025, have had take-home pay of at least £1 in your last monthly assessment period.

If you claim benefits as a couple, both you and your partner can open a separate Help to Save account, provided you both meet the eligibility criteria. Crucially, if your circumstances change and you stop claiming benefits after opening the account, you can still keep and use your Help to Save account for the full four-year term.

How the 50% Bonus Works

The main appeal of the scheme is the 50% tax-free bonus, which can total up to £1,200 over the four-year period.

Savings and Maximum Bonus

Savers can deposit between £1 and £50 each calendar month. The account is open for a fixed period of four years. If a saver deposits the maximum of £50 every month, they will have paid in a total of £2,400 over the four years, earning the maximum £1,200 bonus.

Bonus Payments

The bonus is paid out in two stages, based on your highest recorded balance during each two-year period:

First Bonus (After 2 Years): You receive a bonus equal to 50% of the highest balance your account has reached in the first two years.

Final Bonus (After 4 Years): This bonus is 50% of the difference between the highest balance achieved in the first two years and the highest balance achieved in the last two years (years 3 and 4).

Crucial Point: If your highest balance does not increase in the final two years, you will not receive a second bonus. The bonus is paid directly into your nominated bank account, not into the Help to Save account itself.

Flexibility and Withdrawals

Unlike some savings products, you can withdraw money at any time. However, withdrawing funds may make it harder to achieve the maximum bonus, as the bonus calculation is based on your highest recorded balance within each period.

For instance, if your highest balance in the first two years was £1,200, but you withdrew £300, your first bonus would still be calculated on the £1,200 maximum, giving you a £600 bonus. But for the second bonus, your new highest balance in years three and four must be greater than £1,200 to earn an additional top-up.

Statistics and Future Reforms

Since its launch in 2018, 575,200 customers have opened a Help to Save account, with a total of £588.2 million deposited. HMRC data shows that the scheme is highly effective for those who use it, with over 90% of savers depositing the maximum £50 each month.

Looking ahead, the government is committed to further enhancements of the scheme from April 2027 to simplify the bonus calculation and make it even more flexible for low-income savers.

Important Note on Benefits

Savers should be aware that their savings in the Help to Save account could affect their Universal Credit if their total savings exceed the capital limit of £6,000. The bonus itself is tax-free and does not count towards the benefit cap.

To apply, eligible individuals can visit the GOV.UK website or use the HMRC app.