Universal Credit provides a lifeline to many, allowing them to put food on the table.
This year an additional 2.7 million people signed up to the all-in-one benefit system, with many claiming it for the first time after losing their jobs or having their hours cut due to the pandemic.
Other people used the benefit to top up their decreased wages and help pay their bills.
The benefit is designed to help those on low incomes or out of work completely and provide regular payments to help with the day-to-day costs of living.
But there are ways for some claimants to access additional funding through a Government designed to help, subject to eligibility.
The Help to Save is a type of savings account which allows certain people entitled to Working Tax Credit or receiving Universal Credit to get a bonus of 50p for every £1 they save over a four-year-period.
Help to Save is backed by the government so all savings in the scheme are secure.
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Under the scheme, savers will be able to put away between £1 and £50 each calendar month, but there is no requirement to pay each month and payments can be made via debit card, bank transfer or standing orders.
After four years, the account will close and claimants are able to keep the money saved.
Those who save are also able to gain two tax free bonuses over the four-year-period, even if money has been withdrawn.
After two years, a bonus payment will be put into the account if it has been used to save, set at 50 per cent of the highest balance put away.
The four year bonus is set a 50 per cent of the difference between the two amounts and bonuses will be paid into a person’s bank account and not the savings account.
The maximum savings bonus is set at £1,200 if the highest amount, £50, is paid into the account each month.
An example on the Government website explains: “You pay in £25 every calendar month for 2 years. You do not withdraw any money.
“Your highest balance will be £600. Your first bonus is £300, which is 50% of £600.
“In years three and four you save an extra £200 to grow your highest balance from £600 to £800. Your final bonus is £100, which is 50 per cent of £200.
“Even though you withdrew some money after your balance was £800, this does not affect your bonus.”
Who is eligible for the Help to Save account?
You can open a Help to Save account if you’re any of the following:
- receiving Working Tax Credit
- entitled to Working Tax Credit and receiving Child Tax Credit
- claiming Universal Credit and you (with your partner if it’s a joint claim) earned £604.56 or more from paid work in your last monthly assessment period
If you get payments as a couple, you and your partner can apply for your own Help to Save accounts. You need to apply separately.
You also need to be living in the UK. If you live overseas, you can apply for an account if you’re either a:
- Crown servant or their spouse or civil partner
- member of the British armed forces or their spouse or civil partner
Even if you stop claiming benefits, you can keep using your Help to Save account.
How payments work
You can save between £1 and £50 each calendar month. You do not have to pay money in every month.
You can pay money into your Help to Save account by debit card, standing order or bank transfer.
You can pay in as many times as you like, but the most you can pay in each calendar month is £50. For example, if you have saved £50 by 8 January you will not be able to pay in again until 1 February.
You can only withdraw money from your Help to Save account to your bank account.
What you’ll get
You can earn 2 tax-free bonuses over 4 years. You’ll get any bonuses you’ve earned even if you withdraw money.
After your first 2 years, you’ll get a first bonus if you’ve been using your account to save. This bonus will be 50% of the highest balance you’ve saved.
After 4 years, you’ll get a final bonus if you continue to save. This bonus will be 50% of the difference between 2 amounts:
- the highest balance saved in the first 2 years (years 1 and 2)
- the highest balance saved in the last 2 years (years 3 and 4)
If your highest balance does not increase, you will not earn a final bonus.
The most you can pay into your account each calendar month is £50, which is £2,400 over 4 years. The most you can earn from your savings in 4 years is £1,200 in bonus money.
Your bonus is paid into your bank account, not your Help to Save account.
If you withdraw money it will be harder for you to:
- grow your highest balance
- earn the largest possible bonuses
Withdrawing money could mean you are not able to earn a final bonus – depending on how much you withdraw and when.
More information can be found, here.