Help to Save' savings account for benefit claimants explained
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While the UK inflation rate continues to erode the purchasing power of cash, those able to continue saving may be looking to invest in the accounts that offer the highest returns. The Government-backed Help to Save account offers the benefit of a 50 percent bonus, and financial journalist and host of the podcast, Money Clinic, Claer Barrett shared details with viewers of ITV’s Lorraine show this morning.
Ms Barrett told viewers: “There is a savings account that pays the equivalent of 50 percent interest that not a lot of people know about and you can only get it if you’re on Universal Credit or Tax Credit.
“It’s called Help to Save. It’s offered by the Government to help people on low incomes build up an emergency fund. If you haven’t heard of it before, get on Gov.uk and have a look.”
Savers can put away between £1 and £50 each calendar month, and there are no requirements to invest every month. Savers can also pay into the account as many times as they like per month – as long as the figure doesn’t exceed £50.
The tax-free bonuses become available at the end of the second and fourth years, and the amount is based on how much the person has saved.
How do Help to Save bonuses work?
After the first two years, savers will get the first bonus, which will amount to 50 percent of the highest balance saved.
After four years, savers get a final bonus if they continue to save. This bonus will be 50 percent of the difference between the two amounts:
- The highest balance saved in the first two years (years one and two)
- The highest balance saved in the last two years (years three and four).
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The most Britons can earn from their savings in four years is £1,200 in bonus money. However, it must be noted that if the highest balance doesn’t increase, savers will not earn a final bonus.
The Help to Save account will close four years after it’s opened and the saver will not be able to reopen it or open another one.
Who is eligible for a Help to Save account?
To open a Help to Save account, savers must be receiving certain benefits.
- Working Tax Credit
- Child Tax Credit (and are entitled to Working Tax Credit)
- Universal Credit and the person (with their partner if it’s a joint claim) had take-home pay of £658.64 or more in their last monthly assessment period.
For those who receive benefit payments as a couple, the person and their partner can apply for their own Help to Save accounts, but they will need to apply separately.
Savers must also be living in the UK, although people who live overseas can apply if they or their partner is a crown servant or a member of the British armed forces.
People can also still keep the account even if they’ve stopped claiming benefits.
To apply for the account, savers will need their Government Gateway user ID and password, as well as their UK bank details. More information about that can be found on the Government website.
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