A penny saved

A survey suggests the Help to Save scheme is popular with users, though many are missing out

NEARLY one in three people using a flagship government saving scheme heard about it through Money Saying Expert - more than any other source. Around 29% of customers using Help to Save, which tops up your deposits, first found out about the incentive from the popular site founded by Martin Lewis, or on his TV show.

The survey of around 2,700 savers conducted by HM Revenue and Customs between December and January - found the accounts had helped people put away more money, more often.

But millions are still likely to be missing out on the extra cash as data shows around 280,000 accounts had been opened by March - compared to at least 3.5 million people originally estimated to be eligible.

Help to Save customers can pay up to £50 a month into their account and get 50% bonuses on what they set aside after two and four years - up to a maximum of £1,200.

The Government launched the scheme in 2018 in a bid to help people on low incomes put more money away for a rainy day.

It is open to people on Working Tax Credit (WTC), those entitled to WTC and getting Child Tax Credit, and those on Universal Credit who earned at least £617.73 in the last month.

Around 23% of the survey's respondents said they had heard about the saving scheme through the government website GOV.UK.

That was followed by HMRC (22%) and friends or family (11%).

The research included interviews, with one user saying: “The scheme definitely needs to be run again. I don't think a lot of people knew about it. Get the word out there.”

Recent HMRC statistics on Help to Save show nearly 20,000 accounts were opened in the two months to the end of March.

But there are also likely to be thousands more entitled to the extra cash after the Covid-19 pandemic caused a surge in demand for benefits.

Around 72% of people said it was very easy to set up an account, while a further 24% said it was fairly easy.

Savers are paid the first 50% bonus on the maximum amount they have in their account during the first two years, even if they have less than that at the end of the period.

For example, someone who put away £500 but had to take out some of that before the two years were up would still get 50% of the £500 - a £250 bonus.

But the second bonus is 50% of the difference between the maximum saved during the first two years, and the maximum achieved during years three and four.

That means if the same person reached a peak of £600 at any point during the next two years, their second bonus would be £50 half of the £100 difference.

Around 72% of people who answered the survey “completely” understood they got a 50% bonus after two years.

Slightly fewer people (67%) gave the same answer when asked if they understood that was based on the maximum amount saved at any point over the period, even if they had to make withdrawals.

And only around half (53%) completely understood the second bonus was based on the difference between the maximum saved over years one and two, and years three and four.

Despite this, 83% strongly agreed Help to Save had helped them squirrel away cash, while 71% said the same when asked if they were saving more than before they had the account. But only 56% strongly agreed they were more likely to save in the future, which HMRC said could be influenced by low interest rates for “traditional” saving methods.