Government helps those on low incomes to save

A new savings account has been launched by the UK Government in a bid to encourage low-paid households to save for a rainy day.

Via a Help-to-Save account, an estimated 3.5 million people on working tax credits or universal credits will be given a 50% bonus on every £1 saved over a four-year period.

Help-to-Save was first announced in March 2016, but only launched on the 12th of September after a trial run involving 45,000 individuals, who managed to save a total of £3m during the pilot.

Savers can deposit between £1 and a maximum of £50 every month, though they do not have to pay in every month. A 50% bonus is added in year two and at the end of the four year period.

An individual can pay in a maximum of £2,400, receiving a £1,200 bonus. As a Government scheme, all savings are secure. The government estimates that the scheme will cost the Treasury £255m by 2022-23.

After the four years the account is closed, and participants are not allowed to open another. If a saver closes the account early, they won’t be able to open another, nor will they be able to receive their final bonus.

Applicant will need a bank account to apply for the scheme, which can be done here.