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Catherine Furze

Millions on Universal Credit get more time to claim £1,200 cash boost

Millions of people on Universal Credit and other benefits have been given extra time to get a £1,200 cash boost.

It is thought that about three million low-income families could be missing out on the Help to Save scheme, a Government initiative which gives families claiming certain benefits extra cash to add to their rainy day savings pot.

The scheme had previously been due to end this Autumn but it was extended until April 2025 in the Spring Budget, which means that more people can join the 359,200 who have signed up since the scheme was launched in September 2018.

Read more: Save more than £100 by changing the way you pay your energy bill

To get the maximum £1,200, each eligible person in the household will need to save £50 a month for four years - a total of £2,400. The boost will bring your savings to £3,600 - the equivalent of saving £75 per month. And if there's two people who can open an account each, the totals will be doubled.

Here we take a look at the scheme in more detail, including how to open an account.

Do I qualify?

You can open an account if you live in the UK and receive one of the following benefits:

  • 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 £658.64 or more from paid work in your last monthly assessment period

Your eligibility is checked as part of the application process and you won’t be able to apply unless you’re eligible for the account.

Can we open a joint Help to Save account?

You won't be able to open a joint Help to Save account, but you and your partner can apply for separate accounts. if you both qualify, meaning your household could get a total of £2,400 bonus if you both manage to pay £50 into your individual accounts every month.

What happens if I stop receiving the benefits?

You can still keep saving in to the account even if you no longer qualify for working tax credit or Universal Credit. You only need to be eligible at the point you open the account.

Do I need to commit to saving every month?

You can save between £1 and £50 per month, but you don't have to save every month.

When do I get the exta money?

After two years, you'll get the first 50% bonus and once that's been paid, you can either decide to stop saving, or you can keep saving into it for another two years. If you keep saving, you could get another bonus paid at the end of the four years.

How is the bonus worked out?

  • For the first two years, the bonus is paid on the highest amount you' ever had in the account throughout the two years, not the amount that's there at the end. So if you managed to save £500 but had to withdraw £250 before the two years were up, you would still get a bonus of 50% of £500, not the £250 left when the two-year mark was reached.
  • The bonus in the second two years is slightly more complicated because it's 50% paid on how much your highest balance in years three and four exceeds your highest balance in years one and two. So, based on the scenario above, you would have £500 in your account at the end of year two (£250 remaining of your savings + £250 bonus). If you withdrew it all at the end of the second year and started saving from scratch, and managed to put another £750 away over years three and four, you would get an extra £125 bonus. This is worked out as follows: £750 (year three and four) minus £500 (at the end of year two) = ££250. 50% of that is £125, which is your bonus.

Since September 2020, when the first set of bonuses were paid, the average amount received was £378. It's worth continuing into years three and four if you can afford to, because although the returns aren't quite as good, they are still likely to beat all the other savings options.

How do I get the money?

You'll get the first 50% bonus paid into your bank account (not into the Help to Save account).

What is I can only afford to put aside a few pounds now and then?

You can pay in to your Help to Save account by debit card, standing order or bank transfer, and can make as many deposits as you like each month, provided you don't pay in more than £50 per month overall.

Can I save for a shorter time and still get a bonus?

After two years, you'll get the first 50% bonus and you can either decide to stop saving, or you can keep saving into it for another two years.

Does it affect my benefits?

Not if the Help to Save account is the only savings you have. However, If you've other savings, it could affect your benefits of it puts you above the universal credit or council tax reduction savings threshold of £6,000. You lose £4.35 of universal credit or £1 of council tax reduction each month for every £250 you've saved over £6,000, and savings of £16,000 or more disqualify you from receiving universal credit or council tax reduction.

If you have a partner, any savings they have are included in the £6,000 threshold, so if you both save the maximum for four years under Help to Save, this could reduce your benefits (since your combined savings will then add up to more than £6,000).

If you get working/child tax credit, the Help to Save bonus isn't taxable, which means it shouldn't affect your benefits in the year the bonus is paid.

Can I earn more if I save more?

The most you can earn from your savings in four years is £1,200 in bonus money.

Is my cash tied up or can I access it if I need to?

Help to Save is an easy-access account, which means you can make withdrawals into your nominated bank account .if you need to at any time. And remember, the first bonus is paid on the highest balance over two years, so there's no need hand=g on to the savings if you really need them.

How do I open an account?

You can open an account two ways:

  • Online: Here at Help to Save on Gov.uk. It'll need you to sign in to your Government Gateway account
  • Call 0300 322 7093 and the HMRC helpline advisers will help you set up an account.

Will my money be safe?

The Help to Save account is run on the National Savings & Investment (NS&I) platform, the Government's savings provider, meaning your deposits are 100% safe.

Can you afford to save in the cost of living crisis? Join in the conversation here

Can I open an account any time?

You can open an account up until April 2025. Once it's opened, you can keep it for up to four years.

What happens if I close my account?

If you close the account before two years are up, you won't get any bonus. However, it's best to leave the account open even if you need all your money back, as the bonus is paid on the highest balance you made it to within the two years. This means that even if there's nothing left in the account at the end of the time, you may still be due a bonus payout.

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