If you are claiming benefits in the UK, you may be keen to know how your savings affect your benefits payments. This is the reason why this blog post will explore whether benefits claimants are allowed any savings when they apply for welfare benefits. For a deeper perspective, we will also discuss what counts as savings when you are claiming benefits and what does not. We will also review the pros and cons of savings exceeding a certain threshold when it comes to claiming benefits.
Are You Allowed Any Savings When You Are Claiming Benefits?
Yes, you are allowed to have some amount of savings when you are claiming benefits. However, there is a certain threshold of the acceptable amount of savings that benefits claimants can have. Certain benefits payments may be reduced due to your savings while you may completely lose the claim of others if you have savings beyond a certain amount.
Acceptable forms of savings that do not affect your benefits claim can either be kept as cash saved in a bank account or invested in stocks or shares.
Benefits that are affected by your savings include the following:
- Council Tax Support
- Housing Benefit
- Income Support
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Pension Credit
- Universal Credit
These are means-tested benefits that take your income and savings into account before your claim application is approved. The reason for this is that these benefits are intended for vulnerable individuals who are low on income and need financial support to meet their living expenses.
On the other hand, non-means-tested benefits or disability benefits are not affected by the amount of savings that you have. These are listed below:
- Attendance Allowance
- Carer’s Allowance
- Disability Living Allowance
- Personal Independence Payment
- Contribution-based Jobseeker’s Allowance
- Contributory Employment and Support Allowance
How Do Savings Affect The Benefits You Claim?
How savings affect the benefits you claim depends on each specific benefit that you claim.
- if you claim Income Support, Jobseeker’s Allowance or Employment and Support Allowance, your savings must be less than £6,000. If you have more than £6,000 in savings, you will not be eligible for these benefits
- if you claim Housing Benefit or Council Tax Reduction, your savings must be less than £16,000. If you have more than £16,000 in savings, you will not be eligible for these benefits
- if you claim Universal Credit, your savings must be less than £6,000. If you have more than £6,000 in savings, your Universal Credit will be reduced by £1 for every £250 you have over the £6,000 limit
- if you are claiming Pension Credit, your savings must be less than £10,000. If you have more than £10,000 in savings, you will not be eligible for Pension Credit
Therefore, the amount of savings you can have while claiming benefits can vary depending on your circumstances. If you are unsure whether you are eligible for benefits, you can contact Jobcentre Plus for new benefit claims.
What Is Included In Savings When You Are Claiming Benefits?
When you are claiming benefits, savings or capital will not include the home you live in or any business assets that you may have. However, the following items will be included in savings during your means-test for a benefit claim:
- Cash in savings accounts
- Cash at home
- Money saved in a current account at the bank
- Money saved in building society accounts
- Money in a Tax-Free Childcare account
- Money in stocks and shares
- Pension pots
- Income bonds
- Redundancy Pay
- Compensation Payouts
- Any other property you own (which is not your main home)
This is just a breakdown of some of the main savings that are included in your benefits claims in the UK. For specific details and more information, please visit your local Jobcentre Plus office or contact your nearest Citizens Advice Bureau.
What Is Not Included In Savings When You Are Claiming Benefits?
The first type of savings that is not included when you are claiming benefits is called “Disregardable Income”. This is income that is not counted towards your benefits claim and includes payments that you received from Child Benefit, Working Tax Credit; as well as some types of disability benefits such as Attendance Allowance or Personal Independence Payment.
The second type of savings that is disregarded from your benefits claim is called capital. This includes things like savings accounts, stocks, shares, and property.
The third type of savings that is disregarded from your benefits claim is called unearned income. This includes things like interest from savings accounts, dividends from stocks and shares, and rental income from a property.
To sum up, the following items are disregarded from savings when you are claiming benefits:
- The first £6,000 of savings
- Any money held in joint accounts
- Childcare vouchers
- Benefits payments received through Working Tax Credits, Pension Credit, Housing Benefit, Council Tax Benefit
- Property owned by the claimant and occupied by a relative who has reached pension credit qualifying age
- Property that the claimant has purchased to live in, is trying to sell, is carrying out necessary repairs so that they may live there
- Property that you had to leave due to a relationship breakdown
- Money gained through selling your home if you plan to buy another one
- Money received through insurance claims if they are to be used for replacements or repair of the house you live in or intend to live in
- Money gained from loans or grants to pay for required repairs or improvements to your house
- Personal possessions such as valuables, jewellery or a car
- Life insurance policies
- Business assets
Can You Lose Your Benefits Claim If You Try To Hide Savings?
Yes, you can lose your benefits claim if you try to hide your savings from the DWP.
The DWP has several measures in place to catch people who are trying to hide their savings. For example, they can request bank statements from claimants, or carry out spot checks on their finances.
If you’re found to have hidden savings, you could be ordered to repay any benefits you’ve received, plus a penalty. In some cases, you may even be prosecuted.
So, if you’re claiming benefits in the UK, it is important to be honest about your finances. Otherwise, you could end up losing your benefits claim entirely.
Most individuals believe that hiding their savings by transferring them, selling their property, or gifting their home to a family member will protect them from a means-test. However, this is considered a deprivation of assets. Additionally, any of the following actions will be counted as deprivation of assets if done in the short period before claiming benefits:
- Giving away a large sum of money
- Transferring the title deed of one’s property
- Spending a large amount of money which is not in line with the person’s usual spending pattern
- Losing money through gambling
- Using savings to purchase items that are excluded from a means-test, such as a car.
Can The DWP Check Your Savings When You Are Claiming Benefits?
Yes, the DWP can check your bank account for transactions and access your bank statement if they suspect you of benefit fraud, so it’s important to declare all your income and savings. The Department for Work and Pensions (DWP) can check your bank account and monitor your financial transactions if they suspect you of benefit fraud. If you’re claiming welfare benefits, it’s important to declare all your income and savings.
The DWP may check your bank account if someone has reported you to them with suspicion of undeclared income or savings. They may also conduct a random check to keep surveillance on benefit fraud cases.
It is considered normal for Universal Credit to check your bank for account activity and confirmation of income and savings when you first apply for a claim. However, during your claim, the DWP may conduct a check on a random basis. In the case of a change in income, savings or even your bank account details, you must inform and update the DWP.
The above discussion brings us to the conclusion that when you are claiming welfare benefits, you are allowed to maintain a certain amount of savings. Savings below a certain threshold will increase your benefits payment while when they exceed the £16,000 upper limit, you can lose your benefits claim. However, it is only means-tested benefits that are affected by the amount of savings claimants have as non-means-tested benefits are not affected by them.
FAQs: Are You Allowed Any Savings When You Are Claiming Benefits?
Can the DWP check my savings?
Yes, the DWP can check your savings since they have access to your bank account details. They will usually do this during a means-test in response to your benefits claim. Additionally, they can also gather evidence through document tracing, interviews as well as monitoring of your social media if they suspect you of benefit fraud.
How far back do DWP check bank accounts?
If a benefits claimant is under investigation for possible benefit fraud, the DWP can have their bank accounts checked as far back as 12 years to gather the required information.
Do benefits stop if you inherit money?
No, benefits will not necessarily stop if you inherit money. In case of a one-off payment through inheritance, the amount will be added to your assets; while an annuity (paid at monthly intervals) will count as an income that can reduce your benefits payments.
How will a lump sum affect my benefits?
A lump sum amount will be considered as part of your savings and will reduce your benefits claim for means-tested benefits. These include Council Tax Support, Housing Benefit, Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Pension Credit, Tax Credits (Child Tax Credit and Working Tax Credit) and Universal Credit.
How much money can you have in the bank on Universal Credit?
You and your partner (in the case of a joint claim) can £6,000 or less in savings to claim Universal Credit. The amount of your benefit claim will decrease as your savings increase. If you have more than £16,000 as savings, you will not be able to claim Universal Credit.