HMRC reveal statistics on Help to Save Scheme which show that more than 132,000 Help to Save account holders are eligible for bonuses which total £14 million.
So far over 132,000 people are signed up to the savings scheme which is Government backed, and more than £31.4 million has been deposited.
What is the scheme?
The scheme offers working people on low income (who receive Working Tax Credit or Universal Credit) a 50% bonus when they save. This means that for every £1 saved they are rewarded with 50p, over 4 years this could result in a maximum bonus of £1,200 available on savings of £2,400.
The Government introduced Help to Save to help those on low income get into the habit of saving and to help them build up a just in case fund. There are no restrictions on how little is saved and when- that is up to the account holder. The only stipulations are that a maximum of £50 per calendar month is put in and that monies withdrawn from the Help to Save account can only be done so to the savers bank account.
The bonuses at the end of the second and fourth year are based on how much has been saved. They are tax-free and can still be awarded even if money has been withdrawn.
How do the bonuses work?
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.
How long does the scheme last?
The scheme lasts for 4 years, after this it cannot be reopened or another Help to Save account set up. The money saved in the account is then the savers along with any bonuses earned.
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