Help To Save is a Government scheme designed for people meeting certain conditions to tuck money away and receive a great return. I’m not entirely sure why it’s not very well-publicised as it’s a phenomenal saving and investment mechanism (perhaps that’s exactly why it’s not very well publicised!).
If you came here looking for a view on the Help To Buy ISA – click here. This article is about a separate scheme called Help To Save.
You can save a maximum of £50 a month for 4 years. After 4 years, your Help To Save account automatically closes. There is nothing to stop you and your partner both opening an account provided you’re both eligible in the first place.
After years 1 and 2, they take your highest saved amount and pay you a 50% bonus. So let’s say you diligently set up a direct debit of £50 a month (i.e. the maximum amount for the maximum length of time), you’ll have saved £1200 in your Help To Save account and you’d get a 50% bonus, i.e. £600. That’s an annualised return of 25%!
To put that into context, a decent property investment will usually yield 5-8% and a good year in the stock market will usually bring around 10% or slightly more. A 25% return is quite superb, especially when you factor in the extremely low risk. The downside here is that you can’t save more than £50 a month. Although, if both husband and wife opened an account, you could save £100 a month.
In years 3 and 4, they take the difference between the highest balance you have in years 3 and 4 and the highest balance you had in years 1 and 2, and pay you a 50% bonus on that. If you replicate what you did in years 1&2 (and keep that money in the account), you should have saved £2400 by the end of year 4. You will therefore get a bonus of £1200.
Securing a 25% annual return for 4 years is the stuff of dreams (well certainly mine anyway).
Eligibility
The eligibility criteria are as follows, but I’ve read online about people simply checking their online government gateway portal (If you don’t have one, I recommend you sign up for one here – it lets you do all sorts of things like check your National Insurance contributions, your forecast state pension etc) and checking if they’re eligible:
- receiving Working Tax Credit;
- entitled to Working Tax Credit and receiving Child Tax Credit; or
- claiming Universal Credit and your household earned £542.88 or more from paid work in your last monthly assessment period.
It’s definitely worth visiting this link and letting the system check if you’re eligible. If you are, you can sign up online straight away.
Is this halal?
Yes as the government bonus is understood as a gift paid for by the government when viewed through the fiqhi lens. The government does not peg this return in any way to interest rates. This is a straightforward scheme which pays a bonus based on the amount you save. This has been designed for policy, rather than commercial, reasons.
Please note that there are scholars who disagree with this position who have shared their fatawa here.
We respectfully disagree as we understand the scheme as a policy-based incentive rather than a commercial scheme by the government. The structure of the scheme through an NS&I account is to facilitate the scheme as a whole - the government's aim here is not to profit from people's savings, but to give them a payout.
How can I best use this?
This is a great savings tool if you’re building cash up for a long-term project. This would otherwise be dead money in your account, or at best, would be invested in something that would likely return much less than 25% if you are being relatively cautious in your investment (and if you’re saving for something long-term, you would be cautious as you wouldn’t want to lose your money).
Alternatively, it’s a great way of saving for kids and you can effectively add it to the pieces I wrote here and here. If you could, as a couple, save £50/month for 4 years in each of your accounts, you’ll have saved £7200 (having only put cash in of £4800. That’s very respectable indeed. If only there were a way of replicating that for 10-15 years!
Conclusion
Let us know how you get on in the comments below. If you’ve got any other top saving tips, let us know too!
