Hello! I am Gemma, a legal assistant here at Lawyer Destroyer. I would be happy to explain how your savings affect Universal Credit.
The absolute limit:
Your Universal Credit will stop completely if you, or you and your partner combined, have £16,000 or more in money, savings, and investments.
The starting point for deductions:
If your total savings are under £6,000, your Universal Credit payments are not affected at all. You will receive your full entitlement.
What happens if your savings are in the middle:
If your savings sit anywhere between £6,000 and £16,000, you can still receive Universal Credit, but your monthly payments will be reduced.
The Department for Work and Pensions assumes that your savings give you a small monthly income. For every £250 you have over the £6,000 threshold, they will deduct £4.35 from your monthly Universal Credit payment.
They count any part of £250 as a full £250. For example, if you have £6,001, they will deduct £4.35. If you have £6,251, they will deduct £8.70, and so on.
What the government counts as savings:
In the benefits system, savings are referred to as capital. This is not just the cash in your current account. It includes money in bank or building society accounts, ISAs, Premium Bonds, stocks, shares, trust funds, and any property or land you own other than the main home you actually live in.
Things to keep in mind:
It is very important not to simply give your money away or buy things you do not need just to drop below the £16,000 limit.
If you spend your savings or transfer money purposefully to get or increase your Universal Credit, the government can use a rule called deprivation of capital. This means they will calculate your claim as if you still have that money in the bank. Paying off reasonable debts, such as a credit card or a mortgage, or buying essential household items is normally perfectly fine. However, buying luxury goods or transferring a lump sum to a relative might cause your claim to be rejected or investigated.
If your claim stops because you hit £16,000, but you later use those savings for normal living expenses and your balance drops naturally back below £16,000, you can simply apply for Universal Credit again.
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