Millions of Universal Credit claimants are missing out on £1,200 savings boost

Housing: PM announces changes to Universal Credit rules

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Help to Save is a savings account where savers get a 50 percent bonus added to the amount that they deposit. The scheme is open to people on Universal Credit and Working Tax Credit, but only a tiny fraction of those who are eligible are taking full advantage of it at the moment.

Savers can deposit up to £50 a month, with a potential bonus of £1,200 over the four years.

Freedom of Information data obtained by investment group AJ Bell found that just 2.5 percent of those on Universal Credit currently have an account and are paying in the maximum amount.

Only 6.5 percent of those on Universal Credit have an account open at the moment.

This does not include people on Working Tax credits.

Laura Suter, head of personal finance at AJ Bell, said: “The reality is that the scheme has been poorly advertised, so lots of people aren’t aware of the perks on offer if they were able to put a bit away each month.

“This is coupled with the fact that lots of people on benefits just don’t have spare money to put away each month, even if they wanted to.

“These figures also pre-date the current cost of living crisis, and it’s inevitable that the number of people saving the maximum £50 a month will slump this year, as will the number of people using the scheme at all.”

Some 359,000 Help to Save accounts have been opened to date, with more than 85 percent of account holders making some contribution.

Ms Suter said: “Had the scheme been better publicised in recent years, more households would have been incentivised to save regularly and would have had a rainy day fund going into the current financial crunch.

“The Government has put minimal money behind marketing Help to Save, meaning many of those who had cash to spare in the past few years didn’t realise they could get this generous boost to their savings.

“Amid the current throng to suggest new policy and tax cuts in the Conservative leadership race, it shows that the Government could be focusing more on promoting existing schemes, making people aware they exist and who is eligible, rather than tinkering with new ideas before current savings perks are working.”

In June, Prime Minister Boris Johnson said the Government was looking at exempting Lifetime ISAs (LISAs) from Universal Credit eligibility checks, to encourage low income households to use them to save for a house.

Savers with LISAs can deposit up to £4,000 a year, with the Government adding a 25 percent bonus, up to £1,000.

The money has to be spent on a first property or go towards a person’s retirement.

Ms Suter said: “Only those two percent or so of Universal Credit and Working Tax Credit recipients already maxing out their Help to Save allowance should sensibly consider a Lifetime ISA as well.

“And even then, they would need to accrue a total of £16,000 across all their accounts before it impacted their tax credits – which is a pipe dream for many on benefits.

“And even then, they would need to accrue a total of £16,000 across all their accounts before it impacted their tax credits – which is a pipe dream for many on benefits.

“For anyone who does have spare cash at the moment this is a hugely valuable incentive they can take advantage of.

“The flexibility of the [Help to Save] scheme is one of its massive perks, as savers can withdraw the money whenever they need it and they will still get a bonus equivalent to half of their highest balance, so they aren’t penalised if they need to take out some cash before the two-year bonus period is up.”

People can deposit between £1 and £50 into a Help to Save account each month, and there is no obligation to pay in every month.

Savers can keep open their account if they stop receiving benefits. has contacted the Department for Work and Pensions (DWP) and HMRC asking for comment.

Source: Read Full Article