New savings scheme for low earners

The Prime Minister David Cameron has announced the creation of a new savings scheme for people on low incomes. The scheme will be called the Help to Save scheme and is expected to be launched by April 2018. The new scheme will allow anyone in work and in receipt of Universal Credit or Working Tax Credits to save up to £50 a month and receive a 50% bonus after 2 years that can be worth up to £600.

Account holders can then choose to continue saving under the scheme for a further 2 years and receive another £600 bonus. This could see those on low incomes receive a bonus of up to £1,200 over 4 years. The new scheme will be open to all adults in receipt of Universal Credit with minimum household earnings equivalent to 16 hours at the National Living Wage (approximately £6,365 in 2017 to 2018) or those in receipt of Working Tax Credits.

The new scheme could help up to 3.5 million people in the UK. There will be no limits on how the money used can be spent but it is expected that the money will be used for urgent costs.

The Chancellor George Osborne commenting on the launch of the scheme said:

‘This government is determined to improve the life chances of the poorest in our society and our new Help to Save scheme will mean millions of low income savers across the country could now receive a government bonus of up to £1,200 to help them build up their savings.’

The Prime Minister also announced the creation of a new national mentoring campaign to help young people who are at risk of under achieving or dropping out from education. The government will provide £12 million over the course of this Parliament to a fund to be managed by The Careers & Enterprise Company.

Source: HM Government | 17-03-2016

You should always take specific advice in relation to your own circumstances as this article can only provide a guide.