Major changes to the Help to Save scheme, an account currently used by thousands of savers, could be announced as part of a new consultation.
Help to Save is a type of savings account offered by the Government, available to low income workers who are claiming certain benefits.
For every £1 you save, you get a bonus of 50p - this means you're getting a 50% return on your money.
This account lasts four years and you can pay in a maximum of £50 a month.
This means if you save the maximum £50 each month over four years, you could end up with a bonus of £1,200.
The bonus payments are made after two years and at the end of four years, and the money you earn is not subject to tax.
Help to Save was originally due to close to new accounts in September 2023 but this deadline was pushed back until April 2025 in the Spring Budget.
In an update this week, the Treasury said it is now launching a consultation to look at “future decisions on a new and improved targeted scheme”.
It is unclear if this means a reformed version of the existing Help to Buy scheme, or a new type of account altogether once the existing scheme closes.
The consultation will look at the eligibility of the existing scheme, as well as how the bonus is paid and how long accounts last.
The consultation will look at how Help to Save “serves its purpose and how the scheme could be simplified” beyond its extension period.
“The aim of simplification is to identify and address complexities,” the Treasury said in notes uploaded online this week.
“This will inform future decisions on a new and improved targeted scheme.”
However, head of personal finance at Hargreaves Lansdown, Sarah Coles, has warned that higher take-up of the scheme could see the Government decide to cut the maximum £1,200 bonus.
She said: "The problem with this review is that the Government is keen to encourage take-up in the target group, but it also has a major emphasis on providing the best value for taxpayers.
"When it asks whether the minimum should be increased, or the bonus structure should be changed, it asks for options that could work "without making the scheme substantially more costly to taxpayers.
"Clearly there’s a difficult balance here, because improving take-up is in itself going to substantially increase the costs of the scheme if the bonus remains the same.
"The Government hasn’t explicitly said it won’t plough more money into the scheme, but given the pressure on government finances, and the fact it’s exploring possible changes to the bonus, we can’t rule out the possibility of a cut."
How to open a Help to Save account
You can apply for a Help to Save account through the Gov.uk website or by calling 0300 322 7093.
You could be eligible for a Help to Save account if you live in the UK and:
- Receive Working Tax Credit
- Are entitled to Working Tax Credit and receive Child Tax Credit
- Claim Universal Credit and you (with your partner if it’s a joint claim) earned £722.45 or more from paid work in your last monthly assessment period
You and your partner can both open separate Help to Save accounts if you receive payments as a couple.
If you have savings elsewhere, having a Help to Save account could potentially see your benefits reduced if you go over a certain threshold.
If you claim Universal Credit or Housing Benefit, you and your partner can have up to £6,000 in personal savings - above this amount, and your benefits could be reduced.
This includes any savings in your Help to Buy account. Help to Save bonuses will not affect your Universal Credit or Housing Benefit payments.
Any savings or bonuses you earn through Help to Save will not affect your Working Tax Credit.
You can save less into your Help to Save account and still get a bonus, although it will be a lower amount.
For example, save £25 a month over two years and you'd get £600 back.
