People claiming Universal Credit can increase their savings by 50% through a government program that rewards them for putting money aside for the future.
This program has been championed by financial expert Martin Lewis and his MoneySavingExpert.com team as a way for struggling households to save some of their income.
In fact, new research by the Department for Work and Pensions and HMRC has shown coverage of Mr Lewis and his team has been ‘a key source of awareness’ for many, the Daily recording reports.
Read more: DWP Universal Credit: Millions of families will lose £570 a year when inflation peaks
There are nearly six million people in the UK claiming Universal Credit and a further five million households receiving help through working tax credits.
This means that there are almost 11 million people who could save money using this program – as long as they are eligible.
Following changes to the sliding scale and working allowance rules at the end of November 2021, the Department for Work and Pensions (DWP) estimates that around 500,000 households could now be eligible for Universal Credit while they are not were not before.
Research on the Help to Save program included an online survey conducted by 2,743 customers between December 2020 and January 2021, as well as 33 follow-up qualitative in-depth interviews throughout March 2021.
He said: “Research has revealed that Help to Save clients are predominantly women working with children at home – consistent with the general profile of the tax credit population.
“A third are single parents. MoneySavingExpert has proven to be a key source of awareness for the program.
“Customer opinions of Help to Save are overwhelmingly positive, with a significant majority recommending the program to others.”
Read on to find out how the program works and who can apply.
What is savings assistance?
The Savings Assistance account is a device to which thousands of people with low incomes, or benefiting from certain advantages, could be eligible.
This is a state-run scheme which allows those eligible for Working Tax Credits or Universal Credit to earn a 50p bonus for every pound saved over a period of up to at four years old.
It is also possible to withdraw the money from the account, but there is a catch – the bonus payment is based on the highest amount you have invested.
Even if you can’t save money right now, open an account anyway, while you’re eligible, because you don’t have to save money.
How the savings assistance program works
The scheme allows certain people eligible for the in-work tax credit or universal credit to get a bonus of 50p for every pound saved over four years.
Help to Save is backed by the UK government so all savings from the program are secure.
How Payments Work
You can save between £1 and £50 per calendar month; you don’t have to pay every month.
Payments can be made by debit card, wire transfer or wire transfer.
You can pay as many times as you like, but the maximum you can pay per calendar month is £50.
You can only withdraw money from your Savings Help account to your bank account.
How bonuses work
You get bonuses at the end of the second and fourth years – these are based on how much you have saved.
The maximum you can deposit into your account each calendar month is £50, or £2,400 over 4 years.
The maximum you can draw from your savings in 4 years is £1,200 in bonuses.
What happens after four years?
Your Savings Aid account will be closed four years after it was opened. You will not be able to reopen it or open another Savings Help account.
You can close your account at any time. If you close your account early, you’ll miss your next bonus and won’t be able to open another one.
You can open a Savings Assistance account if you are:
- Benefit from the Labor Tax Credit
- Entitlement to working tax credit and child tax credit
- Claim Universal Credit and your household earned £604.56 or more from paid work during your last monthly assessment period
- Get couple payouts. You and your partner can apply for your own Savings Aid accounts – you must apply separately. You must also live in the UK.
Will this affect my benefit payments?
You can continue to receive tax credits or universal credit while saving with Help to Save.
What happens if I stop claiming benefits?
You can continue to use your Help to Save account.
For more information and to set up your Help to Save account, visit the GOV.UK website here.
You can read the full Help to Save research report on the GOV.UK website here.
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