Last January, the Government announced a new initiative called the 'Help to Save' scheme, which has pricked a good few ears here and there. Aimed at those on low incomes, Help to Save is designed to reward sensible savers with bonuses of up to 50%, so that they can build a "rainy day fund." This plan is equally exciting for any first-time buyers hoping to get together a healthy deposit for their initial mortgage application.
If you're looking to benefit from this government scheme, here's what you need to know.
Will I be eligible for Help to Save?
If you’re an adult British citizen who’s working and receiving Universal Credit (or Working Tax Credits) then you’ll be eligible for Help to Save. The only real requirement is that your minimum household income must be greater than the equivalent of 16 hours a week at the National Living Wage (about £6,365 in the year 2017/18). It‘s estimated that as many as 3.5 million people will be eligible for Help to Save.
How much can I save?
You can stash away any amount up to £50 every month for two years. If you like, you can then carry on for another two years. This means you'll have a maximum of £1,200 at the end of two years, or £2,400 at the end of four. At the two and four year points, you can then receive the bonus.
Tell me more about the bonus
The 50% bonus kicks in at the end of the first two years. If you manage to save the maximum £50 a month then you’ll get a bonus of £600. If you stick with it for another two years, you’ll get another 50% bonus (an additional £600 if you continue to save the full £50 each month) at the end of that.
Are there any restrictions?
Not as far as we know. At present, the Government says savers will be able to use their nest eggs however they please and withdraw money whenever they like.
When can I open a Help to Save account?
The Treasury is still involved in the consultation period at the moment. However, the Government is confident that Help to Save accounts will eventually be available no later than April 2018.