Published On: Sat, Aug 29th, 2020

Universal Credit UK claimants urged to get ‘unbeatable’ savings account | Personal Finance | Finance

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Recipients of Universal Credit are being urged to look into whether they can open a Help to Save account, following the rise in claims for the benefit payment. Official HMRC statistics published this week show during the past six months, 60,000 new accounts have been opened.

For those individuals who are making deposits, the average amount has risen slightly.

The figure now stands at £48 per person per month, on average, with the maximum monthly deposit being £50.

The financial impact of the COVID-19 pandemic means millions more people are now claiming Universal Credit; the total number of claims stood at 5.6 million in July 2020, compared to 2.2 million in the same month in 2019.

Now, claimants are being urged to look into whether they can take advantage of the government’s Help to Save scheme.

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And, they’re being directed to check this “before it’s too late”.

What is Help to Save?

The Help to Save scheme was launched in 2018, and it provides a 50 pence bonus for every £1 that is saved in the account over the course of four years – up to a maximum deposit of £50 per calendar month.

As such, should a person make the maximum contributions each calendar month, they could qualify for the maximum tax-free bonus of £1,200 from the government.

Rather than the bonus being paid into the Help to Save account, it’s paid into the claimant’s bank account.

According to calculations by Quilter, the number of open Help to Save accounts represents around one in every 25 people currently claiming Universal Credit.

To open an account, eligibility rules do apply.

For instance, a person needs to receive Working Tax Credit, be entitled to Working Tax Credit and receive Child Tax Credit, or claim Universal Credit and be in a household which earned £604.56 or more from paid work in their last monthly assessment period.

That said, account holders can continue to pay into the scheme and claim the bonus should they come off Universal Credit.

And, even if individuals can’t afford to set aside money each month just yet, Quilter is urging those eligible to open an account now – as they may be able to make contributions in the future.

Jane Goodland, corporate affairs director at Quilter, commented: “In the last few months, many will have seen a radical change to their financial situation.

“Jobs will have been lost, and some will now be claiming Universal Credit, often for the first time in their lives.

“In order to save for a financially secure future, people claiming Universal Credit should consider opening a Help to Save account while they are eligible, and make the most of the generous government bonus on offer, which they can continue claiming even if they find employment later on down the line.

“Even if you are only able to contribute a small amount each month, it is the first step to building up a financial safety net and will encourage a positive savings habit once you get back into employment and can begin to contribute more each month.

“If you are able to find employment later on down the line, you will still be able to save into the scheme and could generate a £1,200 bonus if you save the maximum amount of £2,400.

“It is times such as the present which emphasise the need for people to have an adequate savings buffer to manage financial shocks without having to turn to high-interest credit.

“But despite the unbeatable 50 percent rate of return, uptake remains low as only 3.6 percent of eligible individuals have opened an account and many of these accounts remain empty.

“This may be due to the fact that those on Universal Credit will struggle to find the cash at the end of the month to pay into the scheme, but the extremely low uptake rates should concern the government.”



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