Record £32m Deposited in Help to Save Accounts During Lockdown

Low-income Britons deposited a record £32.1 million into Help to Save accounts in the six months to July and will earn government top-ups on their savings.

Help to Save accounts reward savers with a 50% bonus on what they squirrel away, with maximum deposits of £50 permitted each month. Over four years, savers can earn a maximum bonus of £1,200 on savings of £2,400.

Help to Save accounts are available to certain people receiving Working Tax Credit or claiming Universal Credit.

During coronavirus lockdown, many took advantage of tumbling outgoings to stash even more. Between February and July, savers added £32.1 million to Help to Save accounts, up 57% from the previous six-month period, according to the latest figures from HMRC.

The average deposit into the accounts rose to £48, just shy of the £50 maximum permitted each month.

Additionally, 60,000 new accounts were opened between February and July, a 37% uptick from the previous six months and reflecting both increased desire to save and greater numbers of eligible savers. There were 2.8 million people on Universal Credit in January; by July that had risen to 5.6 million, following a dramatic rise in claims during the depths of lockdown in March and April. 

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Hundreds of thousands of people are likely to have qualified for the first time. Lockdown pushed over two million people onto Universal Credit: around a million of them are still claiming, and a big chunk of them will be eligible.

“With their lives turned upside down and their finances stretched to breaking point, you’d have thought the last thing on many people’s mind will have been the fact they might now qualify for a savings scheme. However, the uncertainty of life and the value of a safety net were also becoming far clearer, and people realised the value in having something to fall back on.”

More than 222,000 Help to Save accounts have now been opened since the scheme launched in September 2018.

The savings bonanza echos trends seen across the market. The Bank of England has estimated that Britons put a collective £57.3 billion into savings accounts between March and May, as we fretted about the future and saw expenditures on commutes and meals out vanish.

But other figures about Help to Save accounts suggest that while some are managing to grow their savings, others are raiding their piggy banks to make ends meet. £13.3 million was withdrawn from the scheme between February and July, the highest amount ever. 

Additionally, while 132,000 people are paying into Help to Save accounts, the highest amount recorded, more than 60,000 accounts have yet to receive a deposit, HMRC said.

Coles urged consumers to save as much as they can and not to worry if they have to withdraw money along the way.

“The fact you can start from £1 a month, and you can get your hands on the cash at any time, means there’s no harm in trying to save. The fact that bonuses are based on your highest ever balance rather than the balance at the end of the period also means you won’t be punished for having to withdraw cash along the way,” she said.