New Help to Save scheme rules mean 550,000 more Brits could get a boost

A whopping 550,000 Brits are set to receive a much-needed financial uplift as the Government broadens a scheme aimed at assisting low-income individuals to save for unforeseen circumstances. Amid skyrocketing living costs that have left working families struggling to make ends meet, HMRC has announced an expansion of its Help to Save scheme, extending it to an additional 550,000 people who are employed and receiving .

Launched in 2018, this relatively obscure savings scheme is designed to incentivise those on lower incomes to save, offering a generous 50p reward for every £1 saved over a four-year period. The revised eligibility criteria mean that more people than ever will be able to open an account, start saving from as little as £1 a month, and begin building a financial safety net with the aid of government top-ups.

Savers can deposit up to £50 per month into the scheme - while monthly payments are flexible and not obligatory, those who consistently contribute the maximum amount stand to benefit the most. Over the full four-year term, savers who deposit the maximum of £2,400 will qualify for a £1,200 bonus, with payments made at the end of the second and fourth years.

READ MORE:

READ MORE:

The decision to expand the scheme comes in light of alarming statistics from the Department for Work and , which reveal that a staggering one in five Britons has less than £100 in savings.

This leaves millions dangerously vulnerable to unexpected expenses, ranging from car repairs to skyrocketing household bills.

The Help to Save scheme, initially set to close in September 2023, was given a reprieve with an extension until April 2025. Now, ministers have confirmed that the programme will run until April 2027, providing families with more time to benefit.

In a period where the wealth gap between Britain's richest and poorest households is expanding, the savings scheme provides a much-needed boost. As of April 2024, some 516,000 accounts were active, with deposits amounting to nearly £492.5 million - averaging £953 per saver.

Remarkably, 93% of users were depositing the maximum £50 each month, indicating strong demand and the potential to influence financial habits over time.

On the other hand, the country's top savers are amassing fortunes that seem unattainable for many. Government data reveals that 12% of the population have between £50,000 and £200,000 in savings, 3% have between £200,000 and £500,000, and a privileged two per cent have more than half a million pounds stashed away.

In light of these disparities, think tanks and industry groups have proposed radical new ideas to assist struggling families.

One such suggestion, from the Resolution Foundation, involves automatically enrolling workers into a £1,000 easy-access rainy day fund, built through increased pension contributions.

Once the savings threshold is met, any additional money would be directed into longer-term retirement pots.

Schroders and the Pensions Management Institute have put forward a novel concept for a Lifetime Savings Plan, designed to exist alongside conventional workplace pensions and provide a means for individuals to save for unexpected needs as well as major milestones like homeownership or retirement.

Emma Reynolds, Economic Secretary to the Treasury, said: "We want more people to have a bit in the kitty for a rainy day, which is why we are giving hundreds of thousands more working families on tight budgets access to this support."