The UK Government is introducing new financial support for claimants of Universal Credit, with HMRC confirming a £1,200 bonus scheme that could benefit thousands of households. For many people struggling with rising living costs, this announcement comes as welcome news, especially at a time when every pound makes a difference. The scheme has already generated widespread interest, as it promises to help low-income workers build savings while still claiming Universal Credit.
What Is The HMRC £1,200 Bonus?
The £1,200 bonus is part of a government-backed initiative known as the Help to Save scheme. It was designed to encourage people on low incomes to put money aside regularly and receive a tax-free reward from HMRC. The scheme works by matching the savings people deposit with a generous 50% bonus, meaning for every £1 saved, HMRC will add 50p.
Over four years, participants could save up to £2,400, and HMRC would then add up to £1,200 in bonuses. This makes it one of the most rewarding savings schemes available for people receiving Universal Credit or Working Tax Credit.
Who Can Claim The Bonus?
The bonus is aimed at individuals and families on low incomes who are claiming Universal Credit. To be eligible, you must:
- Be a UK resident.
- Be receiving Universal Credit or Working Tax Credit.
- Have employment income of at least £722.45 in your last monthly assessment period (if claiming Universal Credit).
This ensures that the scheme helps those who are working but still struggling financially. Thousands of Universal Credit claimants meet these conditions, which means a large section of the population could benefit from this savings incentive.
How Does The Scheme Work?
The scheme allows you to save between £1 and £50 per month over a four-year period. You don’t have to save the same amount every month, and you can choose when to deposit money. The more you save, the bigger your bonus will be.
For example, if you save £50 every month for two years, you will have saved £1,200. HMRC will then give you a bonus of £600. If you continue saving for another two years at the same rate, you could receive another £600 bonus, bringing the total bonus to £1,200.
Even if you cannot save the full £50 per month, smaller contributions still qualify for the 50% bonus. This flexibility makes the scheme accessible to people with varying levels of disposable income.
Why Is The Government Offering This?
The UK Government wants to encourage financial stability among low-income households. Many families rely entirely on Universal Credit, and without savings, they are more vulnerable to unexpected costs such as car repairs, utility bills, or medical expenses. By offering a cash incentive, the government hopes to create a culture of saving, giving people a financial cushion for emergencies.
It also benefits the wider economy, as households with savings are less likely to fall into debt or depend on crisis loans. The scheme is part of a broader effort to support working families while making sure benefits encourage financial independence.
How To Apply For The HMRC £1,200 Bonus
The application process is straightforward. Eligible claimants can apply for the Help to Save account through the official GOV.UK website or HMRC app. You will need a Government Gateway account to log in and confirm your Universal Credit or Working Tax Credit status.
Once your account is set up, you can start depositing money by debit card, standing order, or bank transfer. You can check your balance at any time online, making it easy to track your progress towards the bonus.
When Will The Bonus Be Paid?
Bonuses are paid directly into your bank account at the end of the second and fourth years of the scheme. That means the first bonus comes after two years of saving, and the final bonus is added after four years. Unlike Universal Credit payments, the bonus is not a monthly addition but a lump sum reward for consistent saving.
This structure ensures that people who stick with the scheme for the full duration receive the maximum benefit. However, even if you stop saving early, you still keep any bonus you have already earned.
How Many People Will Benefit?
According to government estimates, hundreds of thousands of UK households are eligible for the scheme. However, take-up so far has been lower than expected, partly because many people are unaware of the opportunity. With rising living costs, experts expect more Universal Credit claimants to take advantage of the scheme in 2025 and beyond.
The Department for Work and Pensions (DWP) and HMRC have launched awareness campaigns to encourage more people to apply, as the long-term financial benefits could significantly improve the stability of working households.
Why This Matters For Universal Credit Claimants
Universal Credit claimants often face tight budgets, with rising food prices, energy bills, and rent placing huge pressure on their finances. Having access to an extra £1,200 bonus can make a real difference, helping families cover essential costs or build a small emergency fund.
For example, a family that manages to save £20 per month would accumulate £480 over two years. With HMRC’s 50% bonus, they would receive an additional £240, giving them a total of £720. Over four years, this could rise to more than £1,400. Even small savings can grow into meaningful amounts with the bonus added.
What Experts Are Saying
Financial experts have welcomed the scheme, noting that it is one of the few government initiatives that directly rewards low-income workers for saving. Consumer rights groups argue that more awareness is needed, as many eligible people have not yet applied.
Charities have also highlighted that while the scheme is positive, it does not solve the broader challenges faced by Universal Credit claimants, such as delays in payments and deductions. Still, the £1,200 bonus is widely seen as a step in the right direction.
Challenges And Concerns
While the scheme is generous, there are concerns that many low-income households simply cannot afford to save, even with the promise of a bonus. Rising inflation has left many people living paycheck to paycheck, meaning they have little money left over for savings.
Additionally, the four-year commitment may discourage some claimants who prefer immediate financial support rather than long-term rewards. Critics argue that more flexible schemes could attract greater participation.
Final Thoughts
The HMRC £1,200 bonus through the Help to Save scheme offers a valuable opportunity for Universal Credit claimants to build savings and receive substantial government support. For households under financial pressure, the chance to turn £2,400 of savings into £3,600 with government help could provide much-needed stability.
If you are on Universal Credit and meet the eligibility criteria, applying for the scheme could be one of the smartest financial decisions you make this year. With bonuses paid directly into your account, this initiative is a rare chance to receive extra money simply for saving.
