The UK Treasury has announced an expansion of the Help to Save scheme aimed at encouraging savings among individuals with low incomes. Currently, approximately three million people on universal credit qualify for this initiative, which provides a bonus of 50p for every pound saved after specified periods of time. The Treasury plans to make this scheme permanent, extending its eligibility to an additional 1.5 million parents and caregivers starting in 2028.
Help to Save is designed to assist individuals in developing a savings habit and preparing for emergencies. To qualify, individuals must be receiving universal credit and have a take-home pay of at least £1 during their last monthly assessment. Participants can save up to £50 monthly, totaling £2,400 over the course of four years. Bonuses are issued at the two- and four-year marks, with the potential for a maximum bonus of £1,200. The scheme is set to expand to include universal credit claimants with children in education and caregivers providing 35 hours of care each week to disabled individuals.
Additionally, changes to Individual Savings Accounts (ISAs) are anticipated. The annual tax-free saving limit for cash ISAs may be reduced from £20,000 to £12,000 in an effort to shift focus towards investment options. This has raised questions regarding whether individuals will move their funds into stocks and shares ISAs due to the reduced appeal of cash ISAs. Currently, around 25% of cash ISA savers contribute more than £12,000 yearly. Industry voices have expressed concerns that cutting the allowance could complicate ISA transfers and deter individuals from savings and investments altogether.
Source: https://www.bbc.com/news/articles/cwyv9g27myxo?at_medium=RSS&at_campaign=rss