What is the Help to Save scheme? We take a look at what it is, what it is used for, as well as the advantages and disadvantages of it. Whilst using Help to Save is not a practical to purchase a property under short notice (like a bridging loan would), it is important nonetheless to know about these things – maybe because your potential buyers could use this scheme.

What is Help to Save?

The Help to Save scheme was announced back in 2016. The new Help to Save savings scheme is a government initiative that is intended to help those on lower incomes in the UK to gradually build up their savings and to create a so-called ‘rainy day fund’. This could help prevent millions of families across the UK spiralling into debt, by having a savings account that works as a safety net.

The scheme, which has been subject to several delays prior to its implementation, has been introduced by the government as they want to encourage those on all income levels to save, due to the extremely important role savings can have in terms of raising aspirations. People can save money with the intention of buying a car or towards a deposit for a new home, or it can help them in the event of a financial emergency.

According to the and-who-its-for/the-help-to-save-scheme”>GOV UK website, savers who use the scheme regularly could end up receiving up to £1,200 in tax-free bonuses over the course of four years, if they make deposits of up to £50 each month.

Who can apply for the Help to Save scheme?

The Help to Save scheme by HM Revenue and Customs is intended to help up to 3.5 million people across the UK to increase their savings. This includes residents in the UK who are:

  • In receipt of Universal Credit, with minimum household holdings equivalent to around 16 hours a week at the National Living Wage. This equates to around £542.88 for the month
  • In receipt of Working Tax Credit or Child Tax Credit payments
  • You can also be a recipient if you live overseas and are a Crown servant or a member of the British armed forces

If you do meet these eligibility criteria, you do not need to do anything to apply for the scheme

When does the Help to Save Scheme start?

As previously mentioned, the Help to Save scheme has been the subject of numerous delays. However, there is now a start date.  Whilst there are some trials currently being rolled out across the country, which started at the beginning of this year, the scheme will be available to all those eligible in the UK by the start of October 2018.

How does the Help to Save scheme work?

Once the scheme starts to be rolled out across the UK, HMRC will assess your eligibility. If your application is accepted you will be able to start saving with immediate effect. You can manage this account online through the GOV.UK website. This means that paying into the account, checking the balance as well as any other transactions you may carry out for your Help to Save account must all be carried out through this website.

What are the benefits of the Help to Save scheme?

For individuals or families on low incomes in the UK, the Help to Save scheme could provide a genuine lifeline, and encourage good saving habits by providing incentives, for example.

  • Customers have the opportunity to save up to £50 each month into their Help to Save online account
  • At the end of the two-year long Help to Save scheme,  savers will receive a 50% government bonus on savings of up to £50 each month, based on the highest balance achieved in the account
  • At this point, savers have the option of taking out the money that has been saved over the two year period
  • However, if they do decide to keep the money in the Help to Save account for a further two years, they will receive an additional 50% bonus from the government in these savings
  • This means that over the course of four years, customers who have saved £2,400 – the maximum amount one can save, they will receive government bonuses of £1,200

It is important to note that it is possible to withdraw money out of the Help to Save account at any point in time. You can also choose to spend the money accumulated in any way you wish. However, this is likely to affect the amount you receive as a bonus payment at the end of the two year period.