Through this blog post, we will try to analyse the pros and cons of trying to hide one’s savings to claim benefits. The act is not only illegal but also ethically incorrect, therefore, we will assess the repercussions of being caught in a claim fraud as well as explain the impact of savings on the benefits an individual may claim.

How To Hide Savings From Benefits?

There is no guaranteed way to physically hide one’s savings to claim benefits without practising redeemable actions such as keeping one’s money in offshore accounts or deliberate transfer of capital. However below is a list of ways through which individuals may be able to save some money, yet be able to claim benefits by keeping them excluded from a means-test:

  • Property is owned by the claimant but occupied by a relative who has reached pension age 
  • Property is owned by the claimant but occupied by a relative who is incapacitated
  • Property has been left unoccupied due to a relationship breakdown (up to 26 weeks)
  • 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
  • Purchase of personal possessions such as jewellery, furniture or car
  • Purchase of business assets
  • The value of a pre-paid funeral expense
  • Social fund grant payments

Should there be evidence found that an individual has deliberately reduced their capital with the aim to claim state benefits, the government will consider it as notional capital. This means that due to the deliberate reduction in capital, despite not being in possession of the owner, the capita items will be included in their means test and considered to be part of the owner’s possessions.

However, should a claimant be 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 as they assess the claimant’s eligibility for benefits:

  • Property (not your main residence)
  • Joint savings
  • Income bonds
  • Premium bonds
  • Stocks and shares

Whether these items are owned by an individual or a partner/spouse who lives with them, they will be counted as savings.

While most individuals consider that transfer of savings, selling of one’s property or gifting their home to a family member is a safe way of hiding their savings or at least keeping them away from being counted for a means-test, this is considered as deprivation of assets. Additionally, any of the following actions will be counted as deprivation of assets if it takes place within a short period of time prior to one’s claim for benefits:

  • To give away a large sum of money
  • To transfer the title deed of one’s property
  • To spend a large amount of money which is in contrast with the spender’s usual spending pattern
  • To lose money through gambling 
  • To use savings in order to purchase items excluded from a means-test such as a car or 

Which Benefits Can I Lose By Hiding My Savings?

While it may be tempting for some individuals to hide savings with the aim to claim benefits (or increase their claim), there are dire consequences of being caught as a result of benefit fraud. Jail for £96,000 benefit cheat Helen Ryan, who had £184,000 in savings – BBC News and Pensioner to repay benefits after hiding ‘huge’ savings pot | Haringey Council are two examples of individuals whose claim fraud was caught and they ended up serving a jail term as well payment of a fine and clearance of dues.

Below is a list of benefits that claimants may no longer be able to claim when found guilty of benefit fraud:

  • Carer’s Allowance
  • Employment and Support Allowance
  • Industrial Injuries Reduced Earnings Allowance
  • Industrial Injuries Retirement Allowance
  • Jobseeker’s Allowance
  • Severe Disablement Allowance
  • Widowed Mother’s/Parent’s Allowance
  • Housing Benefit
  • Incapacity Benefit
  • Industrial Death Benefit
  • Industrial Injuries Disablement Benefit
  • Pension Credit
  • Universal Credit
  • Working Tax Credit
  • War Disablement Pension
  • War Widow’s Pension
  • Income Support
  • Industrial Injuries Unemployability Supplement
  • War Pension Unemployability Supplement
  • War Pension Allowance for Lower Standard of Occupation

Which Benefits Are Affected By Savings?

Benefits that are means-tested (this means that the claimants’ income and savings affect their benefits claim) will reduce with an increase in your savings. These include the following:

  • Jobseekers Allowance
  • Income Support
  • Pension Tax
  • Housing Benefit
  • Council Tax Support
  • Universal Credit
  • Working Tax Credits
  • Child Tax Credits

To learn about your eligibility for benefits’ claim, click on this online benefits calculator.

What Is The Savings Limit To Claim Universal Credit

To be eligible for Universal Credit, your savings (including capital and investments) must be less than £16,000. The amount of Universal Credit that you may be able to claim depends upon the amount of savings you have which may range anywhere between £6,000 to £16,000. In this case, too, the first £6,000 will be disregarded.

However, if you live with a partner and they have savings amounting to £16,000, these will be counted as your savings.

In addition to savings, the eligibility criteria for Universal Credit also requires claimants to be above 18 years of age and under the state pension age, be unemployed or on low income and be a UK national.

How Much Savings Can You Have Before You Have To Pay For Care?

If you are a UK resident, the amount of savings you can have before having to contribute towards a care home fee depends on whether you live in England, Wales, Northern Ireland or Scotland. Below is the threshold for each country:

  • England: £23,250
  • Wales: £50,000
  • Northern Ireland: £23,250
  • Scotland: £28,750

Anyone who holds savings above this amount will have to contribute towards their care home fees until their savings fall below this threshold. When that homes, claimants will be able to receive financial aid from the state through their local councils. 

The following criteria will be applicable in this case:

  • If someone has savings over £ 23,250, the claimant will have to bear the entire cost of the care home fees
  • If someone has savings of £14,250–£23,250, the claimant will have to contribute most of their weekly income towards care home fees. They will also pay an assumed extra amount of £1 per £250 of capital that they have
  • If someone has savings below £14, 250, the claimant will not be required to pay for their care home fees from this amount and will have to pay from their weekly income. 

What Can I Buy That Is Not Deprivation Of Capital?

According to the Guidance manual on assessment of capital, the following situations will not be considered as deprivation of capital:

If the claimant has sold or transferred capital with the intention to:

  • Reduce or return the debt that they owe (either to an individual, bank or the state)
  • Make credit cards payments
  • Pay for mortgage
  • Make payments for day to day expenses
  • Improve their quality of life (for e.g by purchasing a new car or rebuilding a kitchen)
  • Improve their quality of health through medical expenses
  • Go on a holiday

On the other hand, if local councils are able to prove a deliberate reduction in any of the following by individuals claiming benefits, they will be held responsible for the deprivation of capital, making it considered as notion capital:

  • Residential premises (other than the one the claimant lives in)
  • Capital under the care of someone else
  • Payments or instalments of income
  • Compensation payments
  • Arrears of payment
  • Capital not held in the UK
  • Business assets
  • Company or trusts owned by the claimant

Does Deprivation Of Capital Affect Housing Benefit?

According to The Deprivation of Capital Rule in Welfare Benefits | Social Welfare Updates | News deprivation of capital will directly lead to the capital being considered as notion capital; which means that capital that was earlier excluded from the means test will not be accounted for. This act reduces (in some cases removes) the benefits claim of individuals against whom the deprivation is proven.

If you live in sheltered or supported housing and are above state-pension age, you may be able to claim Housing benefit (recently replaced with Universal Credit) to pay for your rent. The eligibility criteria also state that claimants must either be unemployed, on a low income or have low savings. However, Housing Benefit will not cover the costs of food, heating, energy or heating costs. If your Housing Benefit does not cover the entire amount of rent, you may consider applying for a Discretionary Housing Payment through your local council

Conclusion:

Through a detailed analysis of the relationship between savings and benefits, we have come to realise that one may be able to reduce their savings through various means; however, if a deliberate reduction of capital is proven by the Department for Work and Pensions, it will be added in the claimants means test and thus reduce their eligibility for benefits. 

FAQs: How To Hide Savings From Benefits?

How do I hide my savings?

Generally, savings may be hidden by being put away in a trust or an offshore account. However, if the aim is to hide savings to claim state benefits, the Department for Work and Pensions may find out about hidden savings during their assessment of benefits claim which will not only lead to a loss of benefits but also a possible fine as the act will be considered as a benefits fraud.

Can the DWP check my savings?

Yes, the DWP can cehck your savings as they have access to your bank account details during a means-test in response to yourbenefits claim. Additionally, they can also gather evidence through document tracing, interviews as well as monitoring of your social media.

What is the best way to hide money?

The most commonly practiced methods of hiding money include asset trasnfers, putting your money in a trust or an off hsore bank account. However, if found out by authorities, it will be considered as deprivatio of capital and you may not only lose your claim to state benefits but will also have to payback the amount you received in excess of your eligibility.

How much savings can I have on benefits 2021?

To claim benefits, your savings hsold be less than £6,000. As the amont of your savings rise, your benefits will decrease until you reach £16,000 in savings. This is the maximum cap, after which cliamntas are no loger eligible for beenfits.

Do benefits stop if you inherit money?

No, benefits may not necessary stop if you inherit money. In case of a one-off payment through inheritience it will be added to your assets; while an annuity (paid at monethly intervals) will be considered as an income and may reduce your benefits.

References:

Pensioner to repay benefits after hiding ‘huge’ savings pot | Haringey Council

How do savings and lump-sum payouts affect benefits?

How much savings can I have on benefits? | Raisin UK

Jail for £96,000 benefit cheat Helen Ryan, who had £184,000 in savings – BBC News

Effect of savings on benefits | Disability charity Scope UK

Deprivation of savings and other capital – Entitledto

Savings rules in working age benefits – Entitledto

BP1 – Assessment of capital

Shelter Legal England – Treatment of capital in housing benefit calculations

How savings can affect benefits

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