Published On: Thu, Sep 3rd, 2020

Universal Credit UK: The £1,200 bonus which could encourage claimants to save | Personal Finance | Finance

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Universal Credit is currently overseen by the Department for Work and Pensions (DWP) to ensure those on the benefit are receiving the correct amount at the right times. The DWP benefit is designed to help those who are either on a low income or have found themselves out of work. The payment is issued monthly, or twice a month for some people in Scotland to provide a regular level of support.

To be eligible, in most cases a person must be over the age of 18, but they must be under State Pension age and resident in the UK.

They must also have less than £16,000 in savings to be entitled to receive the sum from the DWP.

However, while there is a limit on the amount of savings a person can have, this does not mean claimants are not encouraged to save.

In fact, saving through a certain method could help them gain a £1,200 bonus from the government.

READ MORE: Universal Credit UK: How a Budgeting Advance could help Britons

However, this does not have to be a regular endeavour, and people can save at their own pace.

But people should bear in mind the account is only open for four years, and will close after this time.

Therefore saving as much as possible to cash in on the full government bonus may be wise.

Claimants can earn two tax-free bonuses across four years, and after the first two years, they will receive a bonus if they have been using the account to save.

The bonus is calculated at 50 percent of the highest balance saved.

Then after four years, a final bonus is calculated if a person continues to save. It will be 50 percent of the difference between the two amounts:

  • the highest balance saved in the first 2 years (years 1 and 2)
  • the highest balance saved in the last 2 years (years 3 and 4)

And for those worried about their savings, the scheme is backed by the government, which means any money deposited into an account is secure and safe.

The bonus is saved into a bank account rather than the Help to Save account, which is worth noting.

However, there are eligibility criteria Universal Credit claimants must meet to open such an account.

If claiming Universal Credit, a household must have earned £604.56 or more from paid work in their last monthly assessment period to open a Help to Save account.

People must also be resident in the UK in order to take advantage of the account and its potential bonus.

And Help to Save bonuses will not affect Universal Credit payments, so claimants can start saving without worry.

The Help to Save scheme has proven particularly popular in recent months.

It appears many Britons are seizing the opportunity to save towards their future, potentially to weather any financial storms brought about by the COVID-19 crisis.

Statistics from HMRC have shown record numbers of people are putting away money into a Help to Save account.

From February to July 2020, 60,000 such accounts were opened, which brings the number of accounts to 222,000 since the scheme first launched in September 2018.

Those with a Help to Save account put away a total of £32.1million in the same time span.

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