More people claiming DWP Universal Credit can get free £1,200 cash boost from Sunday
Universal Credit claimants could see a £1,200 boost as the new tax year will see a major change to the benefit’s popular saving scheme. The “Help to Save” scheme is a government savings scheme for low earners on benefits that pays a 50% bonus on the amount saved.
The scheme was originally launched by the former Tory government in September 2018 as a way to encourage low-income households to save, and was due to end for good in April this year. However, Labour extended it for another two years and it will now run until April 2027.
You can save between £1 and £50 into the account each month and you can have the account for up to four years. Unlike a normal savings account, the Help to Save account doesn’t pay interest, and instead, it pays a 50% bonus up to £1,200. So for every £1 put in the account, the Government will boost it by 50p.
If you keep paying into the account; at the two year mark, the Government will pay a bonus of 50% of your highest balance throughout that time. If you put in £50 a month for the next two years, you will have saved £1,200 of your own money.
This means you will also be eligible for a tax-free bonus of £600. The Government also pays another bonus at the four-year mark too – so you could get a boost of £1,200 overall.
Previously, you could open a Help to Save account if you got Working Tax Credit or Child Tax Credit, or you were claiming Universal Credit and earned a minimum of £793.17 from paid work in your last assessment period.
However, this has now changed, and anyone on Universal Credit who’s working and earning at least £1 will qualify for Help to Save. According to the latest figures from HMRC, more than 500,000 Help to Save accounts have been opened since the scheme launched in 2018, with a total of £492million paid in.
If you get Universal Credit or Tax Credit payments as a couple, you and your partner can still apply for your own Help to Save accounts, it’s not possible to open a joint account.
You can pay your monthly savings into the Help to Save account either by a standing order or bank transfer and you can access your savings at any time through your online account or through the HMRC app. You can make withdrawals from the account. However, the cash will arrive in three working days, so it’s probably not the best place to keep your emergency savings pots.
WHATSAPP GROUP: Get money news and top deals straight to your phone by joining our Money WhatsApp group here. We also treat our community members to special offers, promotions, and adverts from us and our partners. If you don’t like our community, you can check out any time you like. If you’re curious, you can read our Privacy Notice.
NEWSLETTER: Or sign up to the Mirror’s Money newsletter here for all the best advice and shopping deals straight to your inbox.
Depending on how much you withdraw and when, withdrawing money could also prevent you from earning a final bonus. This is because the first bonus you receive is on the final balance at the end of the first two years, and the second bonus is based on the difference between the highest balance in years three and four – and the highest balance during the first two years
For example, if you put in £1,000 over years one and two, you would receive a £500 bonus. However, if you then withdraw £400 but save a further £500 in years three and four – so £1,100 in total.
WHATSAPP GROUP: Get money news and top deals straight to your phone by joining our Money WhatsApp group here. We also treat our community members to special offers, promotions, and adverts from us and our partners. If you don’t like our community, you can check out any time you like. If you’re curious, you can read our Privacy Notice.
NEWSLETTER: Or sign up to the Mirror’s Money newsletter here for all the best advice and shopping deals straight to your inbox.
You will get a final bonus of £50 – as that is 50% of £100 – the difference between the two amounts of £1,000 and £1,100. But, if you only saved £400 rather than £500 in the final two years, there would be no bonus in year four.
Once the account is closed, it’s not possible to reopen it or start another Help to Save account. However, if you stop claiming benefits, the good news is you can keep using your Help to Save account as it is in place until the four year period ends.
The money you save in the Help to Save account will not affect your benefit claim. However, if the money in your Help to Save account, combined with other savings exceeds £6,000, your benefit payments might be reduced.
For all you savvy savers and bargain hunters out there, there’s a golden opportunity to stretch your pounds further. The Money Saving Club newsletter, a favourite among thousands who thrive on catching the best deals, is stepping up its game.
Simply follow the link and select one or more of the following topics to get all the latest deals and advice on: Travel; Property; Pets, family and home; Personal finance; Shopping and discounts; Utilities.
HMRC says it takes “less than five minutes” to sign up and you can apply for a Help to Save account on GOV.UK or through the HMRC app. When applying for Help to Save, you’ll need to provide details of a bank account, which you’ll use to pay money in and receive bonus payments – you do not get bonus payments paid into the Help to Save account.
Simon Trevethick, head of communications at StepChange Debt Charity, said the was a “useful way for those on lower incomes to boost their savings”. He added: “After several years of rising cost of living pressures, some households have been left with little to no savings to cope with unpredictable costs.
“We were pleased to see the government extend the scheme toward the end of last year, so it’ll now run for a further two years until April 2027.”
At Reach and across our entities we and our partners use information collected through cookies and other identifiers from your device to improve experience on our site, analyse how it is used and to show personalised advertising. You can opt out of the sale or sharing of your data, at any time clicking the “Do Not Sell or Share my Data” button at the bottom of the webpage. Please note that your preferences are browser specific. Use of our website and any of our services represents your acceptance of the use of cookies and consent to the practices described in our Privacy Notice and Cookie Notice.