The number of claims for Universal Credit has risen by several million during the coronavirus pandemic. This week, Work and pensions minister Will Quince told MPs that more than 3.2 million people have made Universal Credit applications since March 16.
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While saving money each month will likely not be the priority for those struggling to make ends meet at this moment in time, there is a way that some people are able to boost their bank balance by what could be a very significant amount.
Help to Save is a type of savings account, and it is backed by the government so all savings in the scheme are secure.
The scheme allows some on a low income to get help with saving money.
With Help to Save, certain people entitled to Working Tax Credit or receiving Universal Credit can get a bonus of 50 pence for every £1 they save over the course of four years.
Savers can save between £1 and £50 each calendar month in the account.
And, although there is an upper limit, account holders do not have to pay in the money every month.
Money can be paid into the account by a variety of ways: debit card, a standing order, or bank transfer.
And, while it’s possible to pay money in as many times as one likes, the most it can reach in each calendar month is £50.
So, if £50 has been saved in the account by October 10, the saver can only pay in more money when November rolls around.
Over the four years, the saver can earn two tax-free bonuses.
They’ll get any bonuses they’ve earned even if they withdraw money.
After the first two years, those who have been using the account to save will get the first bonus.
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The amount they get is 50 percent of the highest balance they’ve saved.
Then, after four years, people who have continued to save will get a final bonus.
This second payment is 50 percent of the difference between two amounts:
- The highest balance saved in the first two years (years one and two)
- The highest balance saved in the last two years (years three and four).
If the highest balance doesn’t increase though, then the saver won’t earn the final bonus.
As the most that can be paid in each calendar month is £50, a maximum of £2,400 may be saved in the account over four years.
This means that the most a person can earn in savings in four years is a £1,200 in tax-free bonus money.
“Your bonus is paid into your bank account, not your Help to Save account,” Gov.uk explains.
Who is eligible for Help to Save?
Eligibility rules state a person can open a Help to Save account if they’re any of the following:
- Receiving Working Tax Credit
- Entitled to Working Tax Credit and receiving Child Tax Credit
- Claiming Universal Credit and their household earned £604.56 or more from paid work in their last monthly assessment period.
Additionally, a person needs to be living in the UK.
Those who live overseas can apply for an account if they’re either a:
- Crown servant or their spouse or civil partner
- Member of the British armed forces or their spouse or civil partner.
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