What is Help to Save and how do you qualify?

Unsure what Help to Save is and how it could be your key to getting some free cash from the government? This guide explains what you need to know

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Understanding what Help to Save is and whether you are eligible could help you to bag £1,200 from the Government over the next four years. It’s a lot of money – so make sure you don’t miss out. 

Help to Save was introduced by the government in 2018 and allows people on certain benefits to get extra money from the state on the proviso that they get in the savings habit. 

With the cost of living crisis worsening, the energy price cap (opens in new tab) set to rise again, and inflation soaring (opens in new tab), it’s never been more important to know how to save money (opens in new tab). But for families on a low income, saving money at a time where prices are rising can be incredibly difficult. 

But saving via the Help to Save scheme can help provide a boost for those unable to save larger amounts. 

MoneyComms founder Andrew Hagger (opens in new tab) says: “Help to Save is an excellent idea and gives those who qualify an incentive to put some money aside – even if only fairly small amounts.” 

What is Help To Save? 

Help to Save is a government-backed scheme that helps you save money if you’re on a low income. Eligible savers get a bonus of 50p for every £1 they save in a designated savings account, up to a maximum bonus of £1,200.

Help to Save is administered by HMRC and the account is maintained by National Savings and Investments (NS&I). This means all the money held in Help to Save accounts is safe and secure. 

It's an easy access account, so you can withdraw your money whenever you need to. 

How does the Help to Save scheme work? 

Help to Save account holders can save between £1 and £50 each calendar month. A bonus is then paid on the second and fourth anniversaries of the date the account was opened. How much you’ll get depends on how much you’ve saved.

After two years, the bonus is 50% of the highest balance in your account during the previous two years. 

For example, if you paid in £20 a month for the first two years, the amount in your Help to Save account would be £480 (£20 x 24 months). You’d then receive a bonus of £240 (50% of £480).

If you paid in £50 a month for a year (£50 x 12 months = £600), then withdrew £100, and only paid in £1 a month for the second year (£12), your balance at the end of the second year would be £512. But your bonus would be £300 (50% of the highest balance of £600).

This bonus is paid into your nominated bank account – not your Help to Save account. 

The second bonus, after four years, is based on the amount that your highest balance in years three and four exceeded your highest balance in years one and two.

So, if your highest balance in years one and two was £600 and your balance reached £800 at some point in years three and four, your bonus would be £100 (50% of £200).

If you paid in the maximum of £50 every month for four years, you’d receive a bonus of £600 after year two, and another £600 after year four; a total of £1,200.

Who is eligible for Help to Save? 

You can open a Help to Save account if you receive Working Tax Credit or Child Tax Credit (opens in new tab) (and you’re entitled to Working Tax Credit).

You’re also eligible for an account if you claim Universal Credit (opens in new tab) and your household earned £658.64 or more from paid work in your last monthly assessment period.

To qualify you also need to be a UK resident or posted overseas as a crown servant or with the armed forces.

Help To Save accounts are individual only – you can’t open a joint account. But if you and your partner both meet the eligibility conditions, you can open individual Help to Save accounts and receive bonuses of up to £2,400 between you.

If you open an account and your circumstances change so you stop claiming Working Tax Credit or Universal Credit, you’re still allowed to keep paying into your Help to Save account.

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(Image credit: getty images)

Should I open a Help to Save account? 

Money experts universally agree that Help to Save is a great option for those eligible and able to save. 

Anna Bowes (opens in new tab), co-founder of Savings Champion, says: “Although interest rates on savings accounts have been rising over the last year, they come nowhere near the level of the bonus on this account. However, there are terms and conditions that apply, so it’s important to understand what the bonus will be based on, in order to achieve the highest bonus you can on the cash you save.”

A few simple calculations show how the Help to Save bonus leads to better returns than standard savings accounts.

If you saved £1,200 in the first two years you had a Help to Save account, you’d earn a bonus of £600. In comparison, if you put your £1,200 in a top-rate easy-access savings account, which right now pays around 1.6% AER (AER stands for Annual Equivalent Rate and is a type of interest rate for savings accounts), you’d earn just £38.71 in interest over two years.

Certified money coach Fanny Snaith (opens in new tab), says: “The Help to Save scheme is brilliant. So many times I hear ‘I cannot afford to save’ but honestly, for the vast majority of people it is a mindset, not a truth. I encourage anyone who uses this phrase to get an old jar, put a sticker on the side and write ‘savings’ on it and then drop a penny in the jar. You are now a saver and can no longer use that phrase – it was just a habit. Now you can make saving a habit instead” 

“If you are able to take advantage of the Help to Save scheme you will advance pretty quickly and realise that saving is a great habit to have. The minimum is £1 per month. Just over 3p a day and you get 50p added by the government. A no-brainer for a mindset shift which is the first step to long term change.”

How can I open a Help to Save account? 

The Help to Save account is only available from the gov.uk (opens in new tab). You’ll need a Government Gateway user ID and password to apply. If you don’t have a user ID, you can create one during the application process. You’ll also need a UK bank account – this is the account your bonus will be paid into.

You can deposit money in your Help to Save account by bank transfer or debit card, or by setting up a standing order to make regular payments. 

GroWiser Financial Coaching founder Graham Wells (opens in new tab), says: “It's best to set up an automatic standing order to transfer money as soon as it arrives in your bank account, right across to your savings account, before you have the chance to even think about it, or change your mind.

“This can help build a savings habit with minimal effort, which is so important nowadays.”

Do I need to save a set amount each month? 

You don’t need to pay the same amount into your Help to Save account each month. For example, you might save £5 one month, then £20 the next. The maximum amount you can deposit each month is £50 and there is no penalty if you are not able to save anything in any particular month. 

Obviously the more you can save, the better, as this will lead to a bigger bonus. 

Bear in mind that if you pay in less than £50 in any one month, you can’t pay in extra in future months to make up for it – the monthly maximum remains at £50. If you pay in more than £50 in a month, the extra money will be returned to you.

When can I withdraw money from my Help to Save account? 

Help to Save accounts are easy access savings accounts – this means you can withdraw your cash at any time. 

Withdrawals don’t affect your bonus amount. This quirk means you aren’t penalised for making withdrawals as the bonus amount is based on the highest sum of money you had in the account during the relevant two-year period. 

After four years your Help to Save account will be closed and all the money transferred to your bank account.

Saving versus paying off debts – what’s best? 

Many people aren’t just struggling with day-to-day budgeting, but debts too. In general, it normally makes sense to use any spare cash to pay off expensive debts (opens in new tab) before starting to save. 

However, although you should pay at least the minimum repayments on your debts each month, the Help to Save bonus means your money will work harder if you save it. 

Financial coach Graham Wells adds: “Help to Save is arguably one type of savings plan that can work well alongside repayment of debt, due to the generous bonus rate.

“Sticking with it until the two and four-year bonus anniversaries should outweigh interest payments on most debts, and importantly, it creates a superb habit that can be nurtured over time.”

Emma Lunn
Emma Lunn

Emma Lunn is a multi-award-winning journalist who specialises in personal finance and consumer issues. With more than 18 years of experience in personal finance, Emma has covered topics including mortgages, first-time buyers, leasehold, banking, debt, budgeting, broadband, energy, pensions and investments. Emma’s one of the most prolific freelance personal finance journalists with a back catalogue of work in newspapers such as The Guardian, The Independent, The Daily Telegraph, the Mail on Sunday and the Mirror.