Chancellor Rachel Reevesis expected to announce the expansion of the savings scheme in Wednesday’s Budget (Shutterstock) (Credits: Shutterstock / Fred Duval)
More people on low incomes will get help saving money through a government-backed scheme that offers a hefty cash bonus, the Treasury said ahead of the Budget.
Chancellor Rachel Reeves will announce that the Help to Save scheme will be made permanent and opened up to parents and carers.
It means an extra 1.5million people will become eligible for the scheme as part of Labour’s attempts to ease the cost of living.
Here’s what you need to know about it.
How Help to Save works
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Help to Save is designed to incentivise lower income people to stash away money and make saving cash easier.
It offers a bonus of up to £1,200 paid straight into the savers’ bank account, split into two payments after two and four years.
Savers must be on universal credit and have a job with take-home pay of £1 or more per month to be eligible.
Savers can put in as little as £1 a month to their Help to Save account (Getty Images)
The scheme lets you put away £50 a month over a four-year period, which works out to £2,400.
The bonus is worked out as 50% of what you have paid into the account, up to the maximum of £1,200 over the four-year period.
What’s changing?
The scheme, widely seen as a key way to get people saving, was previously set to run out in 2027, but now it is being made permanent.
And from 2028 onwards, it will open up to 1.5million more people who are parents and carers on universal credit.
Chancellor Rachel Reeves will deliver the Autumn Budget on Wednesday afternoon (Reuters)
A Treasury source said: ‘For too long governments have ignored the role of carers and parents in keeping the economy ticking.
‘The Chancellor wants to change that and help millions more working people build a savings habit.’
The scheme will be expanded to include benefit claimants who have children in education and carers who provide 35 hours of care to a disabled person.
Why is it useful?
Labour has positioned this Budget as one that tackles the high cost of living for lower income and working people.
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But some of the other measures that will reportedly be announced been criticised for doing the opposite – for example cutting the amount of money that people can save tax-free in a Cash ISA.
The savings limit for Cash ISAs is set to be reduced to £12,000 a year, down from £20,000, amid a push to get people investing in the stock market instead.
It’s also thought that Reeves will also extend a freeze on income tax thresholds past the current 2028-29 deadline, which will cause people to pay more tax in the long run.
The Help to Save scheme ‘has already benefited over 500,000 savers with millions paid out in bonuses, making this permanent and expanding access will mean even more people can benefit for longer,’ the Treasury said.
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