Savings and benefits rules
Can you claim benefits if you have savings? If you’re thinking about applying for benefits, you’re stashing some savings away for a rainy day, or if you already have both benefits and savings and want to know how this will affect you, we have the answers. Read this page to understand savings and benefits rules and find out how benefits and savings impact each other, especially when it comes to means-tested benefits.
Claiming benefits with savings: You can claim benefits if you have savings, depending on the amount you have saved
Benefits affected: Benefits affected by savings are those that are means-tested, i.e. they’re based on how much you earn and how much capital you have
Benefits savings limit: The benefits savings limit depends on which benefits you’re eligible for
Knowing how much savings you can have before it impacts your benefits (and vice versa) can help you to stay on top of your finances and avoid any potential pitfalls of losing out on benefits you’re eligible for. In this guide, you’ll find out more about the savings and benefits rules, including which benefits are affected by savings, how much savings you are allowed on benefits, and what counts as savings. We’ll also crunch some numbers so you know just how much you can have tucked away without your benefits being affected.
Can I claim benefits if I have savings?
You can claim benefits if you have savings, depending on the amount you have saved. Your means-tested benefits may be affected, stopped or reduced if you have a certain amount saved or capital from things like shares or investments. Benefits are often assessed on individual income and personal circumstances.
If you do find you have too much money in savings and are no longer eligible for certain means-tested benefits, you might want to put that money into a savings account that will generate income based on competitive interest rates.
Which benefits are affected by personal savings?
Savings and benefits rules mean that the benefits affected by savings are those that are means-tested. Means-tested benefits, which are benefits that are based on how much income you earn and how much capital you have, can include:
Universal Credit
Working Tax Credit
Child Tax Credit
Council Tax Support
Income-based Jobseeker’s Allowance
Income-related Employment and Support Allowance
Income Support
Housing Benefit
Pension Credit
Universal Credit and your savings limit
If you’re a new applicant to Universal Credit (UC), you’ll likely be put on an updated system that has been rolled out in the UK. If you applied under the old system, you may have to reapply under the Universal Credit bracket if your circumstances change.
How much savings can you have when on benefits? To be eligible for Universal Credit, you’ll normally have to be above the age of 18 and not on a pension. You’re eligible to apply if you aren’t in full-time employment or training and if you don’t have savings over £16,000. If you have savings between £6,000 and £16,000, the amount you’re entitled to will be worked out on the government tariff income (outlined below).
It’s also worth remembering that under the new system of UC, if you live with a partner who has over £16,000 in savings, you won’t be eligible for this benefit. For those with savings below this Universal Credit savings limit, you can apply for UC, but the amount you receive will depend on how much you have in your savings account.
How much can I have in savings before it affects my benefits?
Savings and benefits rules may seem complicated at first, and you might be wondering, “how much savings can I have on benefits?”. Once you know how the system works, it’s quite easy to calculate how much money you can have in the bank and still claim benefits, and ultimately how much UC you’ll get.
If you’re of working age, and you have more than £6,000 in savings or capital, the government takes every £250 above that limit and assumes you have the equivalent income of £4.35 a month. This assumed income is then deducted from your monthly UC payment. Here’s an example of how this looks so you can see it in practice:
You have £8,000 in savings, and you want to claim Universal Credit
The government ignores the first £6,000, as this falls into your personal allowance
The additional £2,000 is counted
£2,000 divided by £250 is 8
8 x £4.35 is £34.80
The amount of £34.80 will be deducted from your monthly payments from Universal Credit
Check out the government benefits calculator to understand how your savings might affect your Universal Credit claim.
Housing benefit and council tax reduction savings limit
If you’re claiming housing benefit and council tax relief, you’re eligible if your savings don’t surpass £16,000. If you have savings between £6,000 and £16,000, you may qualify for a reduced amount. If you have savings of less than £6,000, the benefit savings limit doesn’t apply, and you should be able to claim the full benefit.
Can I get pension credit if I have savings?
Pension credit doesn’t have a top level limit, but you may receive a reduced amount if you have over £10,000 in your savings account or in capital. Basically, every £500 over the £10,000 pension credit savings limit is treated as earnings of £1 per week. This extra amount will be added to any other income you have, such as your pension, when working out your claim.
Understanding savings limits for benefits: what is and isn’t included as savings?
Knowing what is classed as savings or capital and what is disregarded goes beyond the number in your savings account. It’s also worth noting that when you’re looking to claim benefits with savings in the bank, your partner’s income and savings may also be considered if you live together.
The table below shows what counts as savings for Universal Credit and other means-tested benefits assessments, and the types of assets that aren’t considered as savings when it comes to claiming benefits.
What is included as savings | What isn’t included as savings |
Cash and any money in your bank or building society accounts | Property that is occupied by a relative who has reached pension age or who is incapacitated |
Income bonds | Property that you have left due to a relationship breakdown for up to 26 weeks |
Stocks and shares | Property that has been purchased to live in or sell but which is currently undergoing repairs or renovation for up to 26 weeks |
Premium bonds | Funds from selling your home if you are planning to buy another home within six months |
Property that isn’t your main home | Money from insurance claims for repairs or replacement for up to six months |
Joint savings or portioned savings you have with other people | Money from loans and grants given for essential improvements and repairs for up to six months |
Your pension, if you are taking it | Capital awarded from damages and injury which is held under the supervision of court or by a personal injury trust |
Life insurance policies which haven’t been cashed in | |
State benefit arrears | |
A pension fund you haven’t yet accessed |
This list of capital isn’t exhaustive, but it gives you a general idea as to what is capital. Capital tends to be valued at its current market value (in the case of property) with any debt accrued deducted from that. Joint capital is usually assessed under the assumption of equal share.
A warning on notional capital
Notional capital is when you have given money away or purchased something expensive to reduce your capital and gain more in benefits. The government may still treat this situation as though you still have that capital. If you have used your savings to pay off debt or if you have used money for what is considered reasonable spending, then this isn’t classed as notional capital. If you have been refused any benefit because of this situation, you should seek advice on whether you are eligible for appeal.
What benefits are not affected by savings?
The following benefits are not affected by income or savings:
Disability Living Allowance
Personal Independence Payments
New Style Jobseeker’s Allowance
New Style Employment and Support Allowance
Attendance Allowance
Carer’s Allowance
Savings and benefits: can the DWP check your bank account?
If you are receiving means-tested benefits from the DWP or housing/council tax benefits from your local authority, both the DWP and local authorities have the right to inquire about your income and savings. While some people may decide not to disclose their savings when applying for benefits or try to hide savings from the authorities, it’s worth noting that certain government agencies, like HMRC and the DWP, can check your savings accounts if they suspect fraudulent activity is taking place.
Further help and advice on savings and benefits rules
Working out benefits and savings can be tricky, but there are lots of resources out there to help you navigate this. If you want to find out more about the savings and benefits rules, you may find the following links helpful:
If you decide to build your savings, visit the Raisin UK marketplace, where you can choose from a range of competitive savings accounts offered by our UK partner banks and building societies. Whether you’re looking for a long-term fixed rate bond or a more flexible easy access savings account, you’ll find a solution to suit your needs and savings goals.
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