The scheme is opening the door to 550,000 more savers hoping to build their wealth, can pave the way for more efficiency while overcoming cost-of-living challenges.
First launched in 2018, the scheme allows savers to earn 50p on every £1 they save. Help to Save has been designed to aid society’s more vulnerable savers in a way that can provide more of a boost to the nation’s economy by easing the strain of higher living costs.
With its extension to 2027 providing the potential to empower as many as 550,000 people, Help to Save may help to introduce a new level of financial literacy to those who may have struggled to build momentum in their savings accounts during recent economic challenges caused by the pandemic and rising inflation.
Help to Save accounts are available via the HMRC app or at GOV.UK, and offer a £50 per month saving limit, meaning that account holders can grow their savings by £25 per month. Over four years, these deposits can grow to a maximum of £2,400, meaning that users can access up to £1,200 in government bonuses simply from using their account.
Open to anyone working and receiving Universal Credit payments, nearly 18,500 people opened a Help to Save account via the HMRC app in 2024.
The scheme offers payouts at the end of the second and final year, helping to produce a healthy windfall for savers to take some significant steps towards building their wealth further. But what can be done once you’ve received your Help to Save payout to continue your investing journey?
While improving your savings to overcome the higher cost of living may mean that your payouts will go towards essential expenses, your Help to Save account can be a great starting point on a longer savings journey. With this in mind, let’s take a look at four intelligent ways to boost your UK savings alongside your Help to Save scheme:
1. Keep Things Tax-Efficient
The Help to Save scheme is certainly an efficient way to save money over time, and if you’re thinking of continuing to save the money withdrawn from your account, one of the best places to keep it is in an ISA, or individual savings account.
ISAs are tax-efficient, and any money you make while saving is completely free from capital gains tax (CGT), meaning that it’s all yours without anything going to the taxman.
With a £20,000 annual allowance, you can save plenty more money each year in your ISA, meaning that more of it can be used to build your nest egg and wealth into the future.
ISAs also offer different types of savings accounts. If you want to continue saving in a similar way to your Help to Save scheme, a Cash ISA will return a fixed or variable AER so that you can plan your savings better. However, you also have the option of investing your money with a Stocks and Shares ISA, which involves investing your money in the stock market.
2. Stocks and Shares Offer Long-Term Returns
While savings accounts and Cash ISAs are a great way of growing your wealth, investing in stocks and shares has historically been a more rewarding option for investors seeking to grow their wealth long-term.
If you’re wondering how to continue investing after your Help to Save scheme pays out, it’s worth looking at your financial goals. Do you want to build your funds to protect yourself against a rainy day or an unexpected bill? Or are you aiming to convert your savings into a major purchase further down the line?
Looking at historical ISA returns, Stocks and Shares ISAs have an average 10-year return rate of 9.64% annually, while Cash ISAs are just 1.21% over the same period. This doesn’t necessarily mean that Cash ISAs are worse, and there’s no guarantee that this trend will continue, but it does mean that stocks and shares are historically a more reliable option to really build your wealth long-term.
3. It’s Always a Good Time to Save for Retirement
Another tax-efficient way to save is by setting yourself up with a pension plan. Although you’re likely to have a workplace pension, it’s possible to build your savings more effectively by creating a pension to save your spare change into.
Because pensions are invested, you’re more likely to increase your earnings by the time you reach retirement age, meaning you can enjoy more comfort simply by saving some of your Help to Save earnings in your pot.
It can be a challenge to build your wealth and save effectively into a retirement fund while managing the rising cost of living, and if you feel that you’re struggling in the short term, it’s worth prioritising your financial comfort today to avoid more discomfort tomorrow. However, if you have some money to put aside for your retirement, it’s certainly a good idea to build more pension savings sooner rather than later.
4. Cater to Your Wants and Needs
While it’s always a good idea to save if you can afford to, it’s essential that you have financial goals that you’re aiming to achieve, or else you risk mismanaging your earnings at the end of all your hard work.
Look to your needs as a priority. If you aiming to build an emergency fund for all the things you need, focus on this as an essential and possibly look to more low-risk saving and investing strategies to help you build your fund effectively.
Once your essential needs have been catered for, you can look further afield to one-off purchases and build your wealth on a long-term basis. This could call for more exposure to stocks and shares, or locking your money away in a pension for a stronger retirement.
Knowing your goals means you can save more effectively, and it’s worth keeping any financial objectives in mind when making investment decisions.
Saving Effectively
While there are many different approaches to saving and investing, the government’s Help to Save scheme is an excellent starting point on your journey.
Whether you look to tax-efficient savings like ISAs or pensions, or more towards building a rainy day fund for easy access, you should keep your long-term financial goals in mind for the best results. Building for the future is a great idea, and doing it with a clear strategy can make your earnings all the more rewarding over time.