Help-to-save

Overview

The Help-to-Save scheme allows individuals who meet certain conditions to open a four-year savings account which pays a tax-free bonus of up to 50% of the amount saved. It was introduced by the government to help those on low incomes build up their short-term savings and to encourage them to form a regular savings habit.

Individuals can save up to £50 each calendar month into the account. A bonus is paid on the second and fourth anniversaries of the date the account was opened. The bonuses are calculated by reference to the highest balances achieved in the account, so it is important to note that making a withdrawal from the account will affect the bonus paid. You can read more about how the bonuses are calculated below.

If an individual saves the maximum amount of £2,400 (48 months multiplied by £50) into the account over its four-year life without making any withdrawals, they will receive bonuses totalling £1,200.

The scheme is administered by HM Revenue & Customs (HMRC) and the account is maintained by National Savings and Investments (NS&I).

Eligibility

To be eligible to open a Help-to-Save account, first you must be in the UK and you cannot have previously opened a Help-to-Save account. You must also either:

• be entitled to working tax credit and actually receiving either working tax credit or child tax credit payments (or would be receiving payments were it not for HMRC recovering an overpayment), or
• be receiving universal credit and have earned income of at least 16 hours a week at the National Living Wage (from 1 April 2024, this is equivalent to £793.17 a month) in your previous assessment period.

One of these conditions must be met on the day you apply for the Help-to-Save account (and also on the day the application is accepted). Once the account is open, it does not matter if you later cease to be eligible, though there are certain restrictions if you later leave the UK (see below).

Therefore, if your circumstances change and you become eligible to open an account – for example, you have started to claim universal credit and you have earned income over the minimum threshold – then you may wish to open an account while you can. You can keep the account open for four years even if your financial circumstances change, meaning that you no longer need to claim benefits.

It is not possible to open a joint Help-to-Save account. If you and your partner each meet the conditions relating to tax credits through a joint claim, then you may each open an individual Help-to-Save account. This means you could get bonuses of up to £2,400 between you.

If you are receiving universal credit as a couple, HMRC have confirmed that the condition relating to earned income is assessed against the total earned income of both you and your partner. If this exceeds the minimum earnings required, then both you and your partner may open a Help-to-Save account, even if one of you does not work.

You should consider the same figure for earned income which is used in your universal credit assessment for the period in question. Sources of unearned income, such as bank interest and some other benefits such as carer’s allowance do not count towards the threshold. If you are self-employed with low profits such that your earned income for universal credit purposes is adjusted by the minimum income floor, you should consider the adjusted figure.

Being ‘in the UK’ for the purposes of opening a Help-to-Save account has a specific meaning depending on whether you are claiming tax credits or universal credit. If you are claiming tax credits, please see our separate guidance. If you are claiming universal credit, please see this guidance on our ‘revenuebenefits’ website aimed at advisers.

Opening an account

Eligible individuals can open a Help-to-Save account at any time until April 2025. Note that accounts can be kept open for their full four years after they are opened.

You can open an account online on GOV.UK or through the HMRC app, which is available to download for free for iOS or Android.

To set up your account, you’ll need the following information:

• your National Insurance number
• the details of your bank account into which the bonus and any withdrawals will be paid
• a Government Gateway account (if you do not have one, you can create one as part of your application).

If you do not have access to the internet, we understand you can also set up an account by calling HMRC on their Help-to-Save helpline.

You do not need to submit any paperwork.

Once your account is opened you will receive a welcome pack from HMRC as well as the sort code and account number of your new Help-to-Save account.

Paying in

You could make one-off payments by debit card by logging into your Help-to-Save account online, on GOV.UK.

You do not have to save the same amount each month, but if you wanted to, you could pay into the account on a regular basis by setting up a standing order. You could arrange a standing order with your bank to pay an amount to your Help-to-Save account at a frequency to suit you.

However, you should note that if you set up a standing order to pay into the account on a weekly basis, this may result in an irregular total amount being paid into the account each calendar month. For example, a standing order of £10 a week will equate to £40 a month in some months and £50 in others.

Payment limits

For each calendar month, you may only pay a maximum of £50 into the account, even if you have made a withdrawal that month (see the heading below). However, you do not need to pay the maximum or indeed anything at all. You should only pay what you can afford.

If you do make a payment into the account, it must be between £1 and £50.

If you attempt to exceed the monthly limit of £50, the payment which causes you to exceed that limit will simply be returned to you.

If you pay less than £50 into the account in a month, you should be aware that you will lose the opportunity to achieve a 50% bonus on the shortfall. It is not possible to make up the difference in a subsequent month. For example, if you only pay £30 into the account in one month, the limit for each subsequent month will remain unchanged at £50.

Withdrawals

You can make a withdrawal from the account at any time by logging into your Help-to-Save account and making the request. The funds will be transferred to your nominated bank account in about three days.

  Withdrawals do not increase the amount you are able to pay into the account in a month. For example, if you have paid £40 into the account in a month and then immediately withdraw £20, you may still only pay a further £10 into the account that calendar month.

Therefore, unless you are able to replace any funds withdrawn within the same calendar month and within the remaining subscription limit for that month, withdrawals will have an impact on your bonus payments. This is because the bonus payments are calculated based on the highest balances achieved in the account. Otherwise, there is no penalty for making a withdrawal.

For a more detailed example of how making a withdrawal has an impact on your bonus payments, please see below.

If you withdraw all of the funds from the account, it would not close automatically. You could still save more money in it at a later date.

Bonuses

Non-taxable bonuses are paid on the second and fourth anniversaries of opening the account.

The bonuses are paid into the bank account which is nominated when you apply for the account, not the Help-to-Save account itself. The second bonus is calculated slightly differently from the first.

The first bonus is calculated by taking 50% of the highest balance achieved in the first two years of the account being open.

The second bonus is calculated by taking 50% of the difference between:

• the highest balance achieved in the first two years (which was used in the calculation of the first bonus), and
• the highest balance achieved in the third and fourth years.

The second bonus is only paid on the increase in the highest balance in years 3 and 4 over the highest balance in years 1 and 2. This means you will not be eligible for the second bonus at all unless the highest balance in years 3 and 4 is more than the highest balance in years 1 and 2.

So, for example, if you saved the same amount in the account each month for four years but withdrew the full balance immediately after the first bonus was paid, the second bonus would be nil, because the highest balance during years 3 and 4 would be no higher than the highest balance during 1 and 2.

Interest

Interest is not paid on the account.

Means-tested benefits

The Help-to-Save bonus is not treated as income for benefits purposes.

However, while the balance in your Help-to-Save account is ignored for tax credits, it is treated as capital for housing benefit and universal credit purposes. Your claim to either of these benefits would be affected if your total capital exceeds £6,000.

You should be aware that if two partners each take out a Help-to-Save account, saving the maximum possible over four years, the combined capital and bonus payments at the end of the four years would exceed the £6,000 threshold.

Debt recovery

While HMRC have legal powers to recover debts from any UK bank account in limited circumstances and Help-to-Save accounts are no different from any other account in this respect, HMRC will generally not use these powers against vulnerable customers.

Account termination

After four years from the date of opening, your Help-to-Save account will be closed automatically. The balance will be transferred to your nominated bank account along with any final bonus payment.

Closing your account early

It is possible to close your Help-to-Save account before the end of the four-year term, but you must keep it open to receive any bonus payment.

If you close your account before you are due to receive the bonus, you will forfeit the bonus.

Leaving the UK

If you leave the UK temporarily (generally for no more than 52 weeks), you are able to contribute to your Help-to-Save account as normal for:

• the first 8 weeks, if you are claiming tax credits, or
• the first month, if you are claiming universal credit.

It is possible to extend this period (to no more than 6 months) if you are a mariner or continental shelf worker, or your absence from the UK is in connection with:

• the death of your partner, your child or a close relative, or
• the treatment for an illness or physical or mental impairment of you, your partner or your child.

The extent to which it is possible to extend the period will depend on your circumstances.

If you continue to be absent from the UK beyond this period, you must inform NS&I and stop making contributions to your Help-to-Save account. Failure to do so may incur a penalty. However, you do not need to close your Help-to-Save account and you will continue to be eligible for the bonus, which will be free from tax in the UK, though you might need to consider your tax position abroad if you have become resident in another country.

More information

You can find information on GOV.UK aboutHelp-to-Save.

MoneyHelper have also published some basic information on Help-to-Save, which is available on their page Help to save explained.