Universal Credit (UC) is a benefit designed to support individuals and families with low incomes.
And while it aims to simplify the benefits system, it can be complex to understand, especially regarding how it interacts with your finances.
Universal Credit and Your Savings
Before we take a look at the relationship between Universal Credit and your savings, you will first have to understand how UC is calculated.
This benefit is designed to support individuals and families with low incomes or no income.
Your entitlement is based on your circumstances, including your income, outgoings, and personal details.
While UC aims to simplify the benefits system, it’s important to note that savings can impact your entitlement.
The amount you receive can be reduced if your savings exceed a certain threshold.
How Universal Credit Handles Savings
DWP does not have direct access to your savings account, but it does consider your savings when calculating your Universal Credit entitlement.
This is because the government believes that people with substantial savings should rely on those funds before claiming benefits.
The savings threshold:
- The first £6,000 of your savings is disregarded when calculating your Universal Credit.
- For every £250 over £6,000, your Universal Credit payment will be reduced by £4.35.
- If your savings exceed £16,000, you’re generally not eligible for Universal Credit.
It’s important to note that these rules apply to joint savings if you live with a partner and claim Universal Credit as a couple.
How Does the DWP Know About My Savings?
You’re required to declare your savings when you make a Universal Credit claim.
This includes any savings held in bank accounts, building societies, or other financial institutions.
The DWP may ask for proof of your savings, such as bank statements.
Can the DWP Check My Savings Without My Permission?
The DWP cannot access your savings account without your explicit permission.
However, they can request information about your savings from you.
If you provide incorrect information, you may be committing benefit fraud.
Will My Universal Credit Be Stopped If I Save Money?
Saving money while on Universal Credit is possible, but it’s good to be aware of the savings threshold.
If your savings exceed £6,000, your Universal Credit will be reduced.
However, this doesn’t mean your benefits will stop entirely.
What Happens If My Savings Increase?
If your savings increase and go above the £6,000 threshold, you must inform the DWP.
Failure to do so can lead to overpayment of Universal Credit, which you may have to repay.
Can I Open a New Savings Account While on Universal Credit?
Yes, you can open a new savings account while on Universal Credit.
However, the money in this account will still be considered part of your overall savings and will affect your Universal Credit payment if it exceeds the £6,000 threshold.
What If I Have Savings in a Different Country?
Savings held in a foreign bank account are generally included when calculating your Universal Credit.
You must declare these savings to the DWP.
How Often Does the DWP Check Savings?
There’s no actual timeframe for how often the DWP checks savings.
However, they may request updated information about your financial situation at any time.
If you’re concerned about how your savings might affect your Universal Credit, it’s best for you to seek advice from a benefits advisor.
They can help you understand the rules and ensure you’re claiming the correct amount.
The rules around Universal Credit and savings can be complex so you must always do your best to provide accurate information to the DWP to avoid having to deal with any difficult legal situations.