The £1,200 boost is the maximum bonus available through the Help to Save programme. Individuals can save up to £2,400 across four years and receive a 50% bonus from the government on top of their own contributions. The bonus is paid in two instalments, after the second and fourth years.
The structure is designed to encourage both initial savings and continued growth. Even small contributions qualify, with the government rewarding savers in proportion to their contributions. For example, someone saving £20 per month would still receive a meaningful top-up relative to their contributions, even if they do not reach the maximum.
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How does Bonus Work in Practice?
Under the Help to Save rules, a participant can deposit between £1 and £50 per month. The scheme has two evaluation periods: the first covers the initial two years, and the second covers the final two years. At the end of each period, bonuses are calculated as follows:
- First bonus (after 2 years): 50% of the highest balance during the first 24 months.
- Second bonus (after 4 years): 50% of the difference between the highest balance achieved in years 3–4 compared to years 1–2.
The maximum possible outcome is £1,200 in bonuses for those saving the full £50 each month for four years. The funds are not deposited directly into the savings account; instead, they are transferred to the participant’s bank account.
| Saver Type | Total Saved | First Bonus | Second Bonus | Total Bonus Earned |
|---|---|---|---|---|
| Maximum Saver (£50/month) | £2,400 | £600 | £600 | £1,200 |
| Average Saver (£25/month) | £1,200 | £600 | £0 | £600 |
| Saver with Withdrawals | £1,000 | £500 | £200 | £700 |
This table demonstrates that even if savers cannot deposit the maximum, the scheme still provides significant benefits.
Eligibility Expansion
When first introduced, eligibility for Help to Save was restricted. Universal Credit claimants had to meet a minimum earnings threshold equivalent to 16 hours of work at the National Living Wage. This excluded many low-income and part-time workers.
Starting from 6 April 2025, this threshold will be significantly lowered. Any Universal Credit recipient who earned at least £1 in their most recent assessment period will qualify. This change is expected to open eligibility to more than 550,000 additional households.
Tax credit claimants, including those on Working Tax Credit and Child Tax Credit, also remain eligible. Importantly, once the account is opened, participants can continue saving and receive bonuses even if their benefit status changes during the four-year term.
Relationship with Universal Credit Payments
Help to Save is designed to complement, not replace, Universal Credit. Deposits made into the account do not reduce the claimant’s monthly Universal Credit payment directly. However, general savings thresholds still apply:
| Total Household Savings | Effect on Universal Credit |
|---|---|
| Up to £6,000 | No reduction in entitlement |
| £6,000–£16,000 | Gradual reduction in benefit payments |
| £16,000 or more | Loss of eligibility for Universal Credit |
Savers must therefore manage their accounts carefully to avoid exceeding these thresholds, as exceeding them could result in a reduction or removal of their entitlement to Universal Credit.
Opening and Managing a Help to Save Account
Accounts are administered by National Savings and Investments (NS&I) and can be opened online through the GOV.UK website. The process is straightforward and requires claimants to log in with their Government Gateway ID, verify benefit status, and provide bank details for bonus transfers.
Deposits are flexible. Savers can pay in small amounts regularly, up to the £50 monthly cap, either by standing order or one-off transfers. Withdrawals are permitted at any time, but because the bonus is calculated based on the highest balance, frequent withdrawals may reduce the eventual reward.
Policy Links and Reforms
The expansion of Help to Save coincides with broader reforms to Universal Credit. From April 2025, deductions from Universal Credit payments for debt recovery will be capped at 15% of the standard allowance, down from 25%. Additionally, from 2026, the standard allowance itself will rise above the rate of inflation, thereby boosting disposable income for claimants.
These measures, along with the Help to Save scheme, aim to provide households with greater financial security and encourage sustainable saving practices.
Strengths and Drawbacks of the Scheme
- Up to £1,200 in government bonuses over four years.
- Accessible from April 2025 with just £1 of earnings.
- Tax-free bonus payments, unaffected by income tax.
- Savings account protected under NS&I.
- Bonuses are linked to the highest balance, making withdrawals risky for maximising returns.
- A four-year limit applies, after which the account will close.
- Households with high levels of debt may struggle to save.
- Universal Credit entitlement may be affected if overall savings exceed £6,000.
Frequently Asked Questions:
1. Is the £1,200 given automatically?
No, the £1,200 is the maximum potential bonus. The amount depends on how much is saved during the four years.
2. Can I still use the account if I stop claiming Universal Credit?
Yes, once opened, the account remains valid for the full four years, regardless of any changes in benefit status.
3. How often are bonuses paid?
Bonuses are paid twice: once after two years and again after four years.
4. Will the bonus affect my tax position?
No, the bonus is tax-free and does not count as taxable income.
5. What happens after four years?
The account closes automatically, and no further bonuses are paid. Participants keep all their savings and bonuses.