Help to Save Customers Received £146 Million in Bonus Payments
What Is Help to Save?
Originally launched in September 2018, the Help to Save account offers bonus payments from the government, up to the value of £1,200. For low income households, on Universal Credit or Working Tax Credit, they are able to put money away and receive a 50% bonus. The Help to Save account was due to end in September 2023, but it was extended to April 2025 in the Spring Budget this year.
Collectively, customers using these accounts have received an impressive £146 million in these bonus payments since 2018. HMRC announced the amount, revealing that nearly 450,000 people opened one of these accounts between September 2018 and March 2023. Using these numbers, an average of £324 was paid out on an individual basis.
The way the 50% bonus works out is on how much money is saved in the first place. 50p is earned on every pound saved each month, with the amounts calculated and distributed after the second and fourth years. The highest amount in the account at the end of these periods determines how much you receive as a bonus. Anyone saving the limit of £2,400 will then receive £1,200 from the government.
HMRC said that over 90% of customers banked the maximum £50 each month. As many deposits as necessary can be made each month to get to this amount, and as the account is easy access, you can withdraw any funds already saved as and when you need to. The only downside to making withdrawals is that it decreases the bonus you might receive.
How Does It Work?
First 24 Months
A maximum of £600 can be earned in two 24 month periods. You can save from £1 to £50 into the Help to Save account every month. After the first 24 months, you receive a bonus from the government of 50% of the highest balance that was available across the whole of those 24 months.
For example, if you saved £900 but withdrew £500, you will still receive a bonus of £450 as the highest amount available was £900. The only drawback to making withdrawals is how the second bonus is calculated.
Second 24 Months
Across the second 24 months, the bonus is calculated on the next amount being higher than the total across the first 24 months. Providing you save more than the most you had available before, you will receive a 50% bonus on the difference between the highest amounts.
For example, if you saved £900 in the first 24 months, but withdrew £500, your starting balance for the second 24 months would be £400. This means that you’d need to save more than £900 to receive your bonus. The full amount you can save across 2 years is £1,200. If you saved £700 but withdrew £100, your final amount would be £1,000 (£400 + £700 - £100 = £1,000).
As you saved more than the highest amount in the first 24 months, this means you’ll receive a bonus. The difference between the highest amount in the first 24 months (£900) and the second 24 months (£1,100) is £200, so you’ll receive £100 in bonus payments.
Payments and Account Closure
These bonus payments are paid directly into your bank account, not your Help to Save account. Once you’ve received the payments after the second 24 months, your account will close and you will not be able to open another one. It’s simply a 4 year period to encourage you to save as much as you possibly can.
Boost Your Income
Do you want to start receiving payouts? There’s still money to be claimed from HMRC from PPI payouts, based on tax that was taken at the time. A PPI Tax claim gets you money back that’s rightfully yours. As you have a personal savings allowance, you can earn money on interest tax free.
See how much you can claim by clicking on the button below.