Saving on a low income UK - UK Government Saving gateway

Saving on a low income

Building up savings on a low income has just got easier in the UK. The government supported Saving Gateway will finally get off the ground in 2010, as announced by the Chancellor in the recent Pre-Budget Statement.

This scheme aims to develop the savings habit and encourage regular saving among eight million people on low incomes by providing a strong incentive to save. This strong incentive is that the Government will add 50p for every £1 saved in these special cash savings accounts. But these accounts must run for two years.

The extra cash will be added to the account at the end of the two years You can save up to £25 a month in these plans if you qualify to have one. Someone who saves £600 over two years - the equivalent of the maximum £25 a month - will receive £900 tax-free plus any interest earned. That has got to be very very good news for those on low incomes. Saving on a low income has never had better news than this.

A £25-a-month saving at 2.4 per cent will build up to £615 after two years.

The minimum savings level is £1 a month. Savers can put in more than £25 a month, but any amount over this maximum will not qualify for the government booster. You can miss some monthly payments without losing your Government top-up.

The Saving Gateway will be means-tested and targeted at those claiming benefits and those eligible for tax credits, generally people on a low income.

Saving on a low income has just been given a great boost for UK people on a low income. The government supported Saving Gateway will kick off in 2010 and will allow those eligible to save upto £25 a month for up to 2 years, and the government will add 50 pence for each £ (pound) saved in the account. So anyone who saves the maximum of £600 in the 2 years will get £300 added to the account at the end of the 2 years.

This is great news for anyone saving on a low income. However, there are eligibility conditions for the Saving Gateway.

The Saving Gateway will be means-tested and targeted at those claiming benefits and those eligible for tax credits.

It will probably be offered to those receiving working tax credits, child tax credits paid at the maximum rate, Income Support, Jobseeker's Allowance, Incapacity Benefit, Employment and Support Allowance and those on Severe Disablement Allowance.

If your circumstances change during the two years - for example, you are no longer entitled to Jobseeker's Allowance - you can carry on saving into your plan and still qualify for the 50p per £1 saved.Great news for those saving on a low income.

From 2010, there will be a new government supported cash savings account called the Saving Gateway.

It's for people of working age who are on lower incomes and aims to kick-start a savings habit and saving on a low income and promote financial inclusion. Account holders can save up to £25 a month for two years, and the Government will contribute 50p for each pound saved when the accountmatures.

Accounts will be available from providers such as banks, building societies, credit unions and through the Post Office.

People who are eligible for, or getting, certain benefits or tax credits will be invited to join the scheme.

HM Revenue & Customs (HMRC) are running the scheme, in partnership with HM Treasury.

HMRC, aided by the Department for Work and Pensions (DWP) and their Financial Inclusion Champions, is getting in touch with a range of intermediaries who will have a key role in providing advice on the Saving Gateway, so if you need advice from a person you will know where to turn.

The Saving Gateway team helped by the Department of Work and Pensions (DWP) Financial Inclusion Champions is currently attending events across the UK (March 2010).

These events will provide information about Saving Gateway and will also attempt to get the support of intermediaries to provide advice to customers.

On a slightly different note, child maintenance is to be fully disregarded when calculating out-of-work benefits for parents with day-to-day care for children. This means parents will be able to keep all the maintenance paid to them without it affecting their benefit entitlement.

This is particularly good news for families on a low income and means more money will be available for these families.