To find out more about this latest government initiative, we've put together a Q&A on what we know so far about the newly-announced Help to Save scheme.
What is Help to Save exactly?
For anyone who saves £50 a month, the government will add a 50% bonus each month for up to two years. This means a maximum bonus of £600 can be earned over that time. If savers wish to do so, they can continue with the scheme for an additional two years and earn an extra £600 making them eligible for a total bonus of £1,200. Added to potential savings of £2,400 over four years, this makes a sum of £3,600 that can be withdrawn at the end of the savings scheme.
When does it start?
The exact start date hasn't been confirmed but the government says the Help to Save scheme will be introduced no later than April 2018.
What criteria do I need to qualify for Help to Save?
You need to be in receipt of working tax credits or universal credit. Universal credit is being gradually introduced across the country to replace a number of existing benefits. These are child tax credit, housing benefit, jobseekers allowance, employment and support allowance, income support and working tax credit. You also need a minimum income that is equivalent to working 16 hours at the current minimum wage of £7.20 an hour. In other words, you need to be earning at least £6,365 during 2016/17.
When can I take the money out?
You need to wait two years to receive the £600 Help to Save bonus. Similarly, you need to wait another two years if continuing with the scheme to receive the additional £600 bonus. However, savers are allowed to take money out at any time to cover urgent payments that may need to be made.
Do I need to use the funds for a specific purpose?
No, there aren't any restrictions on how you use the money.
What if my income/circumstances changes when I'm on the scheme?
If you qualify initially for the scheme and then your circumstances change, you can still carry on with the savings scheme including receiving the bonus.