Savings boost: Millions could get £1,200 bonus after Rachel Reeves extends key scheme

The scheme had been scheduled to close in 2027 but will now continue indefinitely. Its eligibility criteria will widen to cover up to 4.5 million potential savers across the country.

Treasury officials said the changes form part of Labour's approach to addressing cost of living pressures while encouraging financial resilience among working families.

They said the updated programme is aimed at reaching those with limited capacity to save but who could benefit most from targeted support.

Help to Save enables participants to deposit between £1 and £50 monthly into a dedicated account.

Contributions are voluntary, allowing savers to skip months without penalty.

The Government pays a bonus equal to 50 per cent of the highest balance achieved, provided in two instalments after the second and fourth years.

Those saving £50 every month can accumulate £2,400 over a four year period and receive the scheme's maximum £1,200 bonus, paid directly into their bank account.

The expanded programme will now include Universal Credit recipients who have children in education, as well as carers providing 35 hours of support each week to disabled individuals.

This represents a change from the original 2018 design, which has undergone several deadline extensions before today's confirmation that the scheme will become a permanent fixture.

A Treasury source said: "For too long governments have ignored the role of carers and parents in keeping the economy ticking.

"The Chancellor wants to change that and help millions more working people build a savings habit."

Government officials note that roughly 500,000 people currently make use of the programme despite far greater numbers meeting its eligibility requirements.

They said the expansion is intended to encourage more households to take up the scheme and build reserves for unexpected costs.

Official figures show that 575,000 individuals have opened Help to Save accounts since 2018, despite 2.7 million people qualifying through Universal Credit employment criteria.

This equates to about one fifth of eligible individuals taking part. Participants have collectively deposited £588million into their accounts during this period.

The announcement drew responses from savings and pensions specialists.

Kate Smith, head of pensions at Aegon, said: "We're pleased the Government has given the Help to Save scheme a lifeline, not only making it a permanent feature of the UK's saving landscape but also extending it to potentially an additional 1.5 million more people, enabling 4.5 million people to benefit and become more financially resilient."

Charlene Young, senior pensions and savings expert at AJ Bell, said: "The reality is that lots of people aren't aware of the generous bonus and how it works if they were able to put a bit away every month."

She added that limited disposable income remains a substantial barrier for many households on lower wages or benefits.

Deven Ghelani, chief executive of Policy In Practice, said: "With costs rising, low income families are struggling to stay on top of bills, never mind having money to put aside."

Grace Brownfield, head of debt advice communications at National Debtline, described the scheme's permanence as "a welcome step especially extending it to parents and carers who are often most exposed to financial shocks."

However, she said: "For many, the biggest barrier to saving is having nothing left at the end of the month, so this must go hand-in-hand with wider measures to tackle the cost of living."

The expansion comes as other Budget measures affecting savers are expected, including reported reductions to annual Cash ISA allowances from £20,000 to £12,000.