As the new tax year is approaching and I have noticed lots of new users here, I thought I would create a thread on the government’s Help to Save scheme. It is an excellent high “interest” (bonus) account available to eligible people on low incomes and some benefits like Working Tax Credit, Child Tax Credit and Universal credit.
You can only open an account if you are eligible and you do not have to continue receiving the qualifying benefit to retain the account and benefit from the bonuses.
You are allowed to save a maximum of £50 a month over 4 years and for every £1 you save, you receive a 50p bonus to a maximum of £600 in the first 2 years. The 3rd and 4th years bonus is 50% of the difference between your maximum balance in years 1 and 2 and your maximum balance at the end of year 4 to a maximum of £600. You can withdraw money at any time if you have an emergency but it will affect your final bonus.
This is by far the best place to start saving - and you could invest your £1200 bonus into your sipp or ISA at the end of the 4 years.
We (me and the Mrs) opened accounts about 16 months ago and save the maximum into both accounts and I opened an ISA and SIPP at the same time, in anticipation of our earning increasing over the next year or so and taking us out of the eligibility bracket (hopefully).
I have not worked out the equivalent interest rate but it is pretty high % equivalent. I imagine some clever bods here could work it out, but if you save the maximum each months not only does the first £50 earn 50% over 4 years, but so does the last £50 which is only invest for 1 month!
More info below and a link to the gov.uk Help to Save page. I hope that this is useful for some of the new lower income peeps here, or anyone finding themselves in a less favourable financial situation but still able to save.
Open an account below