The upcoming Budget holds a significant shift for those striving to build financial security. Chancellor Rachel Reeves is poised to announce the permanent extension of the Help to Save scheme, a program designed to empower individuals with lower incomes to establish a savings habit.
Currently, Help to Save offers a compelling incentive: a bonus of up to £1,200 directly deposited into savers’ accounts. This reward is split into two payments, received after two and four years of consistent saving, and is calculated at 50% of the total amount saved, capped at that £1,200 maximum.
Eligibility for the scheme requires recipients to be on Universal Credit and earning at least £1 per month after tax. It’s a remarkably accessible entry point to saving, allowing individuals to begin with deposits as small as £1 each month, accumulating up to £2,400 over the four-year period.
Previously slated to conclude in 2027, the scheme’s continuation represents a vital lifeline for many. But the changes don’t stop there. From 2028, access will broaden to encompass an additional 1.5 million individuals – specifically, parents and carers on Universal Credit.
This expansion recognizes the often-overlooked financial pressures faced by those juggling work with childcare or significant caring responsibilities. The Treasury emphasized a desire to acknowledge the crucial role these individuals play in sustaining the economy.
The broadened criteria will include benefit claimants with children still in education, and those providing at least 35 hours of care weekly to a disabled person. This targeted approach aims to provide crucial support where it’s most needed.
While the Help to Save extension is framed as a measure to alleviate the cost of living for working people, other proposed changes within the Budget are drawing scrutiny. A planned reduction in the annual savings limit for Cash ISAs – from £20,000 to £12,000 – has sparked concern.
This reduction appears to be part of a broader strategy to encourage investment in the stock market, but critics argue it could disproportionately impact those who prefer the security of cash savings. Furthermore, an anticipated extension of the freeze on income tax thresholds is expected to result in increased tax burdens over time.
Despite these potentially offsetting measures, the Treasury highlights the existing success of Help to Save, noting that over 500,000 savers have already benefited from the scheme, with millions distributed in bonuses. Making it permanent and expanding its reach promises to extend these benefits to an even wider audience.
