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It is common for people to save a certain amount to prepare themselves for the tough times. As no one is aware of what kind of challenging days will come in the future, we tend to save some of our earnings. The savings are a vital source of support in emergencies, either we or the people close to us.
A limit has been set on one’s savings by the Department for Work and Pension. Savings could be affected depending upon the difference by which the limit has been exceeded. Therefore, the savings pattern must be analysed and understood well to claim certain benefits.
How Much Savings Can I Have Before It Affects My Benefits?
- The amount present in the bank (both current and savings).
- Amount in a Tax-free Childcare account.
- Income bonds
- Stocks and shares
- Some other owned property apart from the residence.
- Premium bonds.
The Following Don’t Come Under Savings
- Any property belonging to a close relative has already reached the age to qualify for the pension credit.
- The property acquired by you to live, the one you are currently trying to sell, or some repair work has been going on so that you can live there.
- Any former property vacated due to broken relationship status. It has a validity of 26 weeks.
- After selling the current home, the amount you have to buy a new one doesn’t come under savings.
- The amount comes from insurance claims being used for replacements and repairs.
- The number of loans and grants provided to carry out necessary improvements and repair work.
- Personal items like jewellery, furniture, or vehicles don’t come under savings.
- Any business asset.
- A life insurance policy that is still not converted to cash.
- Grant payments coming from the Social Funds.
- Particular compensation payments.
The amount paid to you by the government in the form of a grant because of Coronavirus, for example, in the case of Coronavirus Job Retention Scheme/ Self Employment Income Support Scheme, is not counted under your savings till a time period of 52 weeks after receiving the same.
How saving would affect the benefits would be dependent upon:
- Types of benefits claimed.
- Amount of savings one has.
The benefits provided are termed as ‘mean tested benefits. These benefits work on the principle that people should fulfil their primary needs before asking the state to help them financially. Therefore, assessment of income and capital is done carefully and thoroughly to see if the person gets any benefits.
Mean tested Social Security benefits
The following come under mean tested social security benefits:
- Income support.
- Jobseeker’s Allowance based on the income.
- Employment and Support Allowance that is Income-related.
- Housing Benefit.
- Universal Credit.
- Pension credit.
- Council Tax Support.
Universal credit is the most availed benefit throughout the UK. In almost every case, the new policy provides only the Universal credit even if some old receipt mentioning ‘Housing Benefit’/ ‘Income support’ is there. The eligibility to avail of the UC is that the person should be at least 18, and the savings do not exceed £16,000.
Capital is all the accountable assets an individual or a couple/partners have. In the case of couples, both capitals are taken into consideration equally. On the other hand, the capital of a dependent child is not taken into account.
Analysis of the Capital to Provide Benefits
Initial £6,000 of the capital is not considered and has no benefit. The limit for the people living in a care home is £10,000, and no benefits are provided if the capital is over £16,000. Moreover, a tariff income of £1 is assumed for each £250 capital between the upper and lower limits.
In the case of Universal Credit, the ‘assumed monthly income’ of £4.35 per month is considered for each £250 capital. So the tariff income and assumed monthly income does not show any return rate a person could be receiving.
The regulations applied on the Pension Credit are separate. The initial capital of £10,000 doesn’t impact the benefits one can receive and is considered ‘deemed income.’ So per week, £1 would be there for each £500 above this value. There is no upper limit set for the capital.
The individuals who are eligible for Pension Credit claiming Housing Benefits also have a lower limit of £10,000. A capital value over £16,000 is also deprived of all the benefits.
What is Notional Capital?
Suppose an individual is found out of deliberately getting rid of the capital they have to secure their entitlement for the benefits. In that case, it is assumed that the capital still belongs to them. This condition is termed notional capital.
For instance, the capital could be transferred to another person, a person can purchase a house (not in the case of Universal Credit), or the debts could have been cleared, which were not mandatory. However, it would still affect their entitlement towards the benefits as it is still considered that the particular capital is under them.
Therefore, hiding the capital or getting rid of it becomes of no use as it would not give you any kind of benefit, but if you are caught doing such an act, the ones you are getting may get cancelled.
To get the desired benefits, you have to manage your savings so that they fit in the limit set by the government bodies, and you don’t have any of them affected due to your bank balance.
The benefits provided are all for the welfare of the territory’s citizens and to provide them with essential needs. Therefore, make sure to take enough of the advice to properly understand what kind of benefit you could be eligible for so that you can apply for the appropriate credit plan or scheme.
Frequently Asked Questions?
Q.1. While on benefits, how much money can I have in my Savings?
A.1. Well, you can have £10,000 in your savings before it affects your claim.
Q.2. Is it possible to claim benefits even if I have savings in the bank?
A.2. Yes, you can claim benefits; however, it totally depends on the amount of savings you have.