Universal Credit claimants could get £1,200 in free cash – how to apply for tax-free bonus

Martin Lewis gives advice on ‘Help to Save’ government scheme

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The HM Revenue and Customs (HMRC) scheme was launched in 2018 to help people on a low income put money away – it encourages them to do so by matching 50p for every £1 they save. However, figures show that millions of people who are entitled to open an account haven’t done so.

The Help to Save scheme is available to 3.5 million British people who are claiming Working Tax Credits, Child Tax Credits or Universal Credit.

Yet, latest statistics show that only 284,000 accounts have been opened to date – which means more than three million people in the UK are walking away from free cash.

Experts fear that people may be struggling so much at the moment that they can’t afford to spare even a small amount of money.

However, they say that making a few small sacrifices now would be beneficial to them in the long run.

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To receive a bonus of £1,200, someone would need to put away £50 a month for four years.

This would result in them having £2,400 saved themselves which would then be added to with a boost of £1,200 by the Government.

And although not everyone who is entitled to do so has opened an account, the majority of people who have are saving the maximum of £50 per month.

Latest statistics from June 2021 show that more than 284,000 accounts had been opened with 91 percent of account holders saving the maximum of £50 per month.

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An HMRC spokesperson said: “The Help to Save scheme is specifically designed to support working households on low incomes to build a rainy-day savings fund while encouraging a regular, long-term savings habit.

“They can save between £1 and £50 each month and earn two tax-free bonuses over four years, worth up to £1,200.

“More than 90 percent of account holders are saving the maximum £50 each month.

“It is quick and easy to set up an account, just search ‘help to save’ on GOV.UK.”

Who is eligible for a Help to Save account?

UK residents are entitled to open a Help to Save account if they are:

  • Receiving Working Tax Credit or Child Tax Credit
  • Entitled to Universal Credit and have earned income of at least 16 hours a week at the National Living Wage (from April 1, 2021, this is equivalent to £617.76 a month) in the previous assessment period.

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Despite this promise of free cash, it is extremely difficult for people on a low income to have any spare money to save.

Rachel Springall from Moneyfacts said this could be why millions of people haven’t even opened an account.

“Those eligible for Help to Save would be wise to take advantage of the scheme if they can, as not only could it improve the savings habit and build a pot for emergencies, but the Government will also boost their pot.

“Little and often is the key to saving towards any goal, but starting this can feel like a hurdle when money is tight.”

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