A new savings scheme for people on low incomes has been launched by the Government and offers a 50% bonus.

Help to Save will reward savers with an extra 50p for every £1 saved, meaning over four years a maximum saving of £2,400 would result in an overall bonus of £1,200.

The launch of the new account followed an eight-month trial, with more than 45,000 customers who deposited over £3m.

HMRC described Help to Save as “easy to use, flexible and secure, will help those on low incomes build up a ‘rainy day’ fund, and encourage savings behaviours and habits.”

Account holders decide how much to save and when to make deposits and they do not need to pay in every month to get a bonus. 

John Glen, Economic Secretary to the Treasury, said: “Savings shouldn’t be a luxury, they are an essential part of planning for the future.

“But for some, putting away even a tenner each month can be a tough habit to get into.

“Whether you’re saving up to take the family on a much-needed holiday or to take the next step in life, Help to Save is designed to make saving possible for every hardworking person in this country.” 

Help to Save is available to working people on Tax Credits and Universal Credit.

Paul Hughes, from Torquay, who took part in the pilot, said: “I wasn’t saving before so it has helped me save and it was easy to use.

“It has enabled me to build up a savings pot and the bonus is very good value.

“It is much better than other savings account as the interest of other savings accounts is low in comparison.” 

Kate Smith, head of pensions at Aegon, backed the scheme.
 
She said: “We welcome the launch of the Government’s Help to Save scheme, potentially helping around 3.5 million people build up a rainy day fund.

“By targeting people in receipt of Working Tax Credits or Universal Credits the scheme has the potential to make more people more financially resilient.

“Although the scheme only runs for four years, getting people in the savings habit will ultimately help them in the longer term and hopefully encourage them to consider other savings such as workplace pensions and ISAs.

“In the current low interest rate environment, cash saving won’t always feel rewarding, but with the Government bonus, this scheme is very attractive.”

Account holders can save between £1 and £50 every calendar month and accounts last for four years from the date the account is opened.

After two years, savers get a 50% tax-free bonus on savings.

If they carry on saving there is another 50% tax-free bonus after four years. 

On maximum savings of £2,400 over four years, the overall bonus would be £1,200. 

To apply, savers can visit www.gov.uk/helptosave or use the HMRC app.