Saving is an important part of managing your finances and is something you might look to do when you want to make a larger purchase – for example to buy a new car or your first home. But it can be hard to save up a larger sum of money if you’re not left with too much after you’ve paid your bills for the month.
To assist with this, the Government has announced a savings scheme, known as Help to Save. To make sure you’re aware of what this scheme is and whether you’d be eligible for it, we’re going to run you through the basics.
What is the Help to Save Scheme?
To help people on low incomes save, the Government is introducing a new Help to Save scheme. This will be available for people who receive Universal Credit or Working Tax Credits and it’s expected that 3.5 million people could benefit from it.
Those who qualify will be able to save up to £50 a month under the scheme, and the Government will top this up with a 50% bonus on their balance after two years, which will be worth a maximum of £600.
At this point you can choose to continue saving in a Help to Save account for another two years and build up another bonus of up to £600. After four years the maximum amount you’d be able to save will be £2,400, with a Government bonus on top of this worth £1,200 – giving you a total of £3,600.
The money that you save doesn’t have to be used for a specific purpose and it’s expected that the scheme will be introduced no later than April 2018.
Will I be eligible?
This scheme is only eligible for people receiving Universal Credit or Working Tax Credits with a household income equivalent to working at least 16 hours a week at the national minimum wage. This will be £7.20 from April 2016 for workers aged 25 and older.
Universal Credit is a benefit that is set to now replace six benefits including Jobseeker’s Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Employment and Support Allowance and Income Support.
If after you start the scheme, your circumstances change – for example, you get a new job and your income increases – then you’d still be allowed to complete the whole scheme without any change. This means you’d be able to continue to save the maximum amount and get the maximum contribution from the Government.
Will I be able to access the savings?
It has been confirmed that anyone with a Help to Save account will be able to make withdrawals from the account if they need the money urgently, and there will be no restrictions over how this money can be used.
Want to know what else was announced in the 2016 Budget speech? We run you through the main announcements in our blog.