Half of Brits have less than £250 in their savings, according to recent research by Starling Bank.
In fact, 35% of them don’t have any emergency savings fund at all – which means any unexpected expense could cause significant financial distress. is a special, limited, savings account set up by the previous Government. It is designed to encourage saving even for those on a low income. Instead of interest on savings, a bonus is paid by the Government every two years. In April, the eligibility to get this account changes – so even more people can access it.
Since the scheme has launched, there have been tight restrictions on who can have a Help to Save Account. You needed to earn a minimum of £793.17 in one assessment period to qualify. This meant many people missed out on a valuable savings resource – and, indeed, missed the lowest income out entirely.
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The new rules mean that anyone earning £1 in a assessment period can access the account. This is a great move – but it still misses out those unable to earn at all. If you have a joint claim, the rules remain the same: you are both able to set up a Help to Save account in your own name. Each has to apply separately.
The earning minimum to qualify (£793.17 until April 2025, £1 thereafter) is between both of you on the joint claim. You only need to qualify for the minimum earnings once, not every assessment period. You once you’ve met the minimum earnings threshold.
Help to Save accounts encourage you to save monthly. You can save up to £50 every month. You can also withdraw money if you have to – but that will affect how much you get in the bonus payments later on. The account is open for four years, meaning you could save up to £2,400 if you manage to save £50 a month (or £4800 if you’re in a couple each saving £50 a month). After that, it automatically closes and your savings are paid into the bank account of your choice. Once you’ve had one Help to Save account, you can’t have another.
The biggest benefit of the Help to Save account is the Government payout. Instead of getting interest on your savings like a normal bank account, you receive a payout from the Government as a bonus every two years. In year two and year four (when the account closes), you receive the value of 50% of the highest balance you’ve held in the account across those two years. So, if you manage to save £50 a month for two years, that’s £1200 saved – and a £600 bonus.
If you save £25 a month for two years, that’s £600 saved and a £300 bonus. This means that if you save the maximum £2400 over the course of four years, you’ll get two £600 payouts, so £1200 in total. One will be paid at the end of year two, and the other is paid at the end of year four when the account closes.
The bonus is paid into your bank account – you can’t select it to be paid into your Help to Save account. However, you could of course have it paid to a specific bank account and set up a Direct Debit to pay in £50 a month for the next year, using the bonus £600 to fund your third year of Help to Save savings.
Having a does not affect your entitlement to receive benefits. However, if your savings in the account mean your overall savings go over the £6000 mark, your means-tested benefits will begin to reduce. For Universal Credit, any savings between £6000 - £16,000 will reduce your benefit allowance on a sliding scale until your savings are £16,001 when you won’t qualify for any means-tested benefits.
If you stop being entitled to Universal Credit at any time while having a Help to Save account, your account still stays open for the full four years. The biannual payout does not count as income for your Universal Credit assessment period.
While £50 might feel like a lot to save every month when your cash is already stretched, there might be some things you can do to find money to put into your new Help to Save account. And remember, £50 is the maximum – even saving £5 a month will help in the long run.
Try:
Switching energy supplier or getting a fixed tariff before the energy price cap rises in April
Installing a if you live in a property as a couple or single person – this could save you hundreds of pounds a year
Using cashback websites for your normal spending online to earn a small percentage back on each purchase
Sign up to to save cash on everyday things
Use loyalty schemes and apps to get vouchers and discounts in your favourite shops
Finally, a favourite tip is to ‘pay yourself first’. Put even £5 a month away into your savings account the second you’re paid – it’ll help you build an emergency fund as it’s easier to save a fiver when there’s cash in the bank at the start of the month, than when you’ve overspent at the end!
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