The amount of savings an applicant has will bear a direct impact on their benefits claim. This is the reason why we aim to learn through the content of this article, how much savings can one have if they are claiming Housing Benefit. We will also analyse situations under which certain savings are excluded from a means test. In the end, we will discuss how to avoid deprivation of capital to claim Housing Benefit.
How Much Savings Can I Have If I Am Claiming Housing Benefit?
You can have a maximum amount of £16,000 in savings if you intend to claim Housing Benefit and are below State Pension age, but having more than £6,000 in savings starts affecting your benefit claim. On the other hand, if your savings exceed £16,000, you will not be able to claim the benefit at all.
In case your savings are less than £16,000 but more than £6,000 your benefit payment will increase as your savings decrease. This means that for every pound above £6,000, your benefit payment will decrease. On the other hand, individuals who have savings of less than £6,000 can claim the full amount of Housing Benefit.
However, if you are above the State Pension age, you can have £10,000 in savings before your Housing Benefit payments start to get affected.
If the DWP find evidence that an individual has deliberately reduced their capital so that they can be eligible for state benefits such as Housing Benefit, the government will consider it as notional capital.
This means that despite not owning the owner, the capital items will be included in their means test and considered to be part of the owner’s possession; due to the deliberate reduction in capital. When this happens, the claim of the individual can be refused or reduced.
Housing Benefit is a means-tested benefit. This means that the claimants’ income and savings affect their benefits claim and the payments that they receive will reduce with an increase in their savings. Other benefits that are affected by the means-test, include the following:
- Universal Credit
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Income Support
- Pension Credit
- Council Tax Support
What Is Included In Savings For A Housing Benefit Claim?
When the DWP assesses your income and savings for your Housing Benefit claim, they will include different forms of capital such as the following:
- money in a bank account or a building society account
- National Savings and Investments accounts; including Premium Bonds or Income Bonds
- stocks, bonds and Individual Savings Accounts (ISAs)
- property that is not your main home
If you receive a lump sum payment for backdated benefits claims, the amount can be ignored from a means test for some time, but it can be included in your savings if you’ve had the amount in your bank account for a year or more. This means that receiving backdated benefits claim can affect your financial assessment for a benefits claim and cause your Housing Benefit payments to decrease.
However, the following are not included as savings for your benefit claim:
- personal possessions including jewellery, furniture or a car
- the value of any pre-paid funeral plans
- life insurance policies that have not been cashed in
Can I Exclude My Savings From A Means Test?
There are certain situations in which savings can be excluded from a means test. However, if the DWP finds out that any of the following situations were not created naturally and were rather fabricated for a benefits claim, the claimant will be found guilty of benefit fraud and their application for Housing Benefit will be refused and possibly banned.
If you wish to keep your savings excluded from a means test, you can see if any of the following situations apply to you:
- The claimant owns a certain property but it is occupied by a relative who has reached pension age or is incapacitated
- The claimant owns a property but it has been left unoccupied due to a relationship breakdown (up to 26 weeks)
- The property is undergoing repairs or renovation (up to 26 weeks)
- The claimant has received proceeds from selling their house and intends to purchase another property with them
- The claimant has received money from insurance claims (up to 6 months)
- The claimant is awarded capital from damages and injury
- The claimant has life insurance policies that haven’t been cashed in
- The claimant has state benefit arrears or a pension fund that hasn’t been accessed as yet
- The claimant has purchased personal possessions such as jewellery, furniture, car or business assets
- The value of a pre-paid funeral expense
- Social fund grant payments
How Can I Avoid Deprivation Of Assets To Claim Housing Benefit?
One can avoid deprivation of assets by making sure that they have not deliberately sold or gifted items that can be counted as savings or capital before their means test for benefits claim; to reduce valuable belongings and claim state benefits.
If a claimant is found to have (a) disposed of assets whether, through sale or gift to immediate family (b) without being able to prove intention other than to claim benefits, this act will be classified as deprivation of assets.
Assets and income assessment is a means-based test conducted by local councils to assess the financial status of claimants.
Meanwhile, if a claimant is found to be in ownership of any of the following capital items, these will be accounted for and considered as savings by the Department for Work and Pensions:
- Property (not your main residence)
- Joint savings
- Income bonds
- Premium bonds
- Stocks and shares
The above discussion has not only highlighted how having savings of more than £6,000 can affect your Housing Benefit claim but also discussed how an increase in this amount will subsequently reduce your benefit payment until you will not be able to claim Housing Benefit if (a) you have more than £16,000 and (b) are above State Pension age.
FAQs: How Much Savings Can I Have If I Am Claiming Housing Benefit?
Does income affect Housing Benefit?
Yes, your income affects Housing Benefit. This can include income from your earnings, pensions, other state benefits or rent received from tenants or boarders.
Can you claim Housing Benefit while working?
Yes, you can claim Housing Benefit while working. This is a state benefit aimed to provide financial support for housing costs to individuals with a low income.
Can the DWP check my savings?
Yes, the DWP can check your savings as they have access to your bank account details 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.
Do benefits stop if you inherit money?
No, benefits may not necessarily stop if you inherit money. In case of a one-off payment through inheritance, it will be added to your assets; while an annuity (paid at monthly intervals) will be considered as an income and may reduce your benefits.
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.